Rising Costs Threaten Rural Hospitality Businesses in Britain
Hotels and other hospitality businesses in some of the most picturesque regions of Britain are sounding the alarm, pleading with government ministers to reduce taxes and green levies to prevent them from going bankrupt. These businesses have been hit hard by a sharp increase in the cost of fuel oil, which has placed an unbearable financial burden on many.
The UK Hospitality trade body has written to Chancellor Rachel Reeves, urging her to halve the VAT rate for the sector to 10 per cent. They are also calling for the cancellation of a planned tourist tax on visitors, aiming to revitalize the struggling industry.
Business owners in remote areas, who are also dealing with a surge in the price of bottled gas due to the outbreak of the Iran war, are urging the government to eliminate green levies on fossil fuels. This would help reduce their energy bills and ease the financial strain on their operations.
Charles Bowman, a hotelier who operates a Grade II-listed property in the Forest of Bowland, Lancashire, highlighted the severity of the situation. He told The Mail on Sunday that the additional costs could determine whether his business survives or not.
"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 absorbed many of the extra taxes to avoid increasing room rates and meal prices, hoping to keep attracting customers. However, this strategy is becoming increasingly difficult to maintain.
The building has been denied permission to install solar panels and is located in a valley unsuitable for wind turbines. Additionally, it lacks an electricity connection powerful enough for heat pumps, making the hotel entirely reliant on oil and gas for power.
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 beginning of the year, even before the conflict. Data shows that refill charges for 47kg industrial-size butane canisters increased from about £95 to £126 between December and March, a 26 per cent rise. Although prices have since dropped in some areas, they remain high.
Margaret Major, managing editor of the Fuel Oil News trade publication, pointed out that while only 7 per cent of UK businesses use bottled gas, this figure rises to 17 per cent in rural counties. This means that firms in remote areas are more vulnerable to 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 surged, 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.
Sarah Chapman-Hughes, who runs the 11-bedroom Mortal Man hotel at Troutbeck in the Lake District, is making "zero" profit and is calling for the removal of green taxes on her LPG bills. She criticized the climate change levy as 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 expects LPG costs to soar to £3,500 a month from the autumn, adding, "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, said rural hospitality businesses are being "unfairly targeted" simply because of their location.
"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.
"For small businesses in hospitality, it's very difficult. We have two full-time and two part-time staff but my wife has been working 14-hour days."
Allen Simpson, chief executive of UK Hospitality, wrote to the Chancellor last week, stating that the sector is facing "extreme cost pressures and is fragile." He called for Rachel Reeves to intervene and "reduce the risk that viable businesses are lost."
The industry body has requested "targeted support," including a VAT cut, extending business rate discounts given to pubs to the rest of the sector, and relief on "non-commodity" charges on energy bills.
A Treasury spokesman stated: "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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