Scottish hospitality businesses are increasingly calling for a reduction in VAT as they grapple with declining consumer visits and escalating costs. The latest survey from the Scottish Licensed Trade Association (SLTA) reveals that pubs, bars, restaurants, and hotels across Scotland are facing challenging economic conditions, prompting calls for urgent government intervention.
Struggling Hospitality Sector
The SLTA’s survey, which covers over 400 licensed venues across Scotland, shows that the hospitality sector is currently experiencing a significant drop in footfall. Colin Wilkinson, Managing Director of the SLTA, highlights the concerning trends: “For 62% of outlets, trading is down compared to last year, despite the temporary boost from Euro 2024. Visitors are becoming more selective, with 19% of customers leaving venues earlier and 16% only attending pubs and bars for special events.”
The report also shows that 64% of respondents have seen a notable decrease in spending, fewer visits, and less time spent in venues, all of which are contributing to the sector’s struggle to stay afloat.
VAT Reduction Seen as Key Solution
One of the most pressing demands from Scottish businesses is a reduction in VAT. According to the SLTA’s survey, 78% of venues believe that lowering VAT would provide much-needed relief to the hospitality industry. With rising costs putting further strain on the sector, the SLTA has now intensified its calls for both the Scottish and UK governments to take immediate action.
Wilkinson emphasises the importance of government support: “Our January 2024 survey revealed that 96% of our respondents felt the Scottish government was out of touch with the business community. With recent political changes in Westminster, we urge both the Scottish and UK governments to collaborate and support one of Scotland’s key industries. Reducing VAT in the licensed hospitality sector and conducting an urgent review of the commercial rating system are critical steps to ensure businesses survive.”
Rising Costs Add to Pressure
The survey also highlights the growing financial burden on hospitality venues, with 42% of businesses reporting an increase in business rates of 10% or more. Additionally, 77% of venues have seen their costs rise by over 10%, a significant jump from the 30% that reported similar increases in January.
This upward trend in costs, combined with reduced consumer spending, has left many businesses in a precarious position. More than half (58%) of the surveyed outlets expect to see a further decline in trade for the remainder of 2024, with 44% predicting a decline of over 10%.
Calls for Action from the UK Government
With a majority of Scottish hospitality venues advocating for VAT reduction, there is growing pressure on the UK government to intervene. Many businesses believe that reducing VAT would not only ease the financial strain but also encourage more consumers to return to pubs, bars, and restaurants. This sentiment is echoed by hospitality businesses across the UK, making it a national issue that demands immediate attention.
