Country hotels seek chancellor's help amid fuel price crisis

Rising Costs and Calls for Relief

Hotels and other hospitality businesses in some of the most picturesque areas of Britain are facing a crisis. With the cost of fuel oil surging, many are pleading with ministers to cut taxes and green levies to avoid going bankrupt. The situation has become so dire that trade body UK Hospitality has written to Chancellor Rachel Reeves, asking for significant changes to help the sector survive.

A Plea for Tax Reductions

UK Hospitality has called for a halving of VAT rates affecting the hospitality sector, suggesting a reduction from the current rate to 10 per cent. They have also urged the cancellation of a planned tourist tax on visitors, arguing that this would help revive the struggling industry. Business owners in remote locations, who are also dealing with rising prices of bottled gas due to the outbreak of the Iran war, are calling for the removal of green levies on fossil fuels to reduce their costs.

Personal Struggles of Hoteliers

Charles Bowman, a hotelier who runs a Grade II-listed premises in the Forest of Bowland, Lancashire, has spoken out about the impact of these price increases. He told The Mail on Sunday that the extra costs could mean the difference between survival and not for some businesses. “The Government could help us with these price rises, rather than benefiting through extra VAT. They should also take the [green] levies off,” he said.

Bowman and his wife Louise, who employ 98 people at the 25-bedroom Inn At Whitewell, described the costs as a "stranglehold." They have been forced to absorb many of the extra taxes to avoid raising room rates and meal prices, which they believe is crucial for keeping customers coming in. The building has also been denied permission to install solar panels, is located in a valley unsuitable for wind turbines, and does not have an electricity connection powerful enough for heat pumps. As a result, the hotel is entirely reliant on oil and gas for power.

Escalating Fuel Prices

The Iran war has caused heating oil prices to skyrocket from 65p a litre in January to as much as £1.30 a litre in early March, before falling back to about 90p. Bowman noted that his LPG costs have also risen sharply since the start of the year, even before the conflict began. Data shows refill charges for 47kg industrial-size butane canisters rose from about £95 to £126 between December and March, a 26 per cent increase, although prices in some areas have since dropped below £100 this month.

Rural Businesses Hit Hard

Margaret Major, managing editor of the Fuel Oil News trade publication, highlighted that while only 7 per cent of UK businesses use bottled gas, this figure rises to 17 per cent in rural counties. This means firms in remote areas are more exposed to the price increases. “It will be the rural small and medium businesses which are hardest hit by these price increases,” she added. As supply costs have increased, so too has the Government's 20 per cent VAT take for both fuel types, which is passed on to customers.

The climate change levy is also added to the cost of each litre of LPG, while fuel duty must be paid on heating oil.

Calls for Immediate Action

Sarah Chapman-Hughes, who runs the 11-bedroom Mortal Man hotel at Troutbeck in the Lake District, said she is making "zero" profit and called for green taxes on her LPG bills to be scrapped, branding the climate change levy a "joke." “Can anyone in Government say they care about the climate? Probably not, otherwise they would have got on with developing different sources of power,” she said.

The hotelier, who expects LPG costs to soar to £3,500 a month from the autumn, said: “We don't have a choice because of where we are located.”

Gary Shorrock, who runs The Old Post Office tearoom in Troutbeck with his wife Jane, echoed similar sentiments, stating that rural hospitality businesses were being "unfairly targeted" simply because of where they were based. “We use fuel oil, which averaged 65p a litre then went up to £1.31 when the war started before falling back. But the Government should have acted immediately to reduce VAT,” he said.

Industry-Wide Concerns

Allen Simpson, chief executive of UK Hospitality, has called for targeted support, including the VAT cut, extending business rate discounts given to pubs to the rest of the sector, and relief on "non-commodity" charges on energy bills. In a letter to the Chancellor last week, he stated that the sector was facing "extreme cost pressures and is fragile," urging Rachel Reeves to intervene and "reduce the risk that viable businesses are lost."

A Treasury spokesman responded by saying, “We have the right economic plan – we're reforming business rates to back hospitality, with a £4.3 billion support package to limit bill rises, alongside capping corporation tax at 25 per cent, cutting red tape and taking action on the cost of living to boost the sector.”

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