A Gwynedd hotel could become ‘unsustainable’ as it faces a tsunami of additional costs in the weeks and months to come. The company faces a bleak financial future as energy costs, VAT and National Insurance payments rise.
Dwyfor Meirionnydd MS Mabon ap Gwynfor shines a light on the plight of the business and has written to Chancellor Rishi Sunak asking for more support for them and thousands of businesses in a similar situation in Wales and the UK.
The hotel – which employs more than 30 people – declined to be named but listed all the additional costs it now faces.
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- Energy. He currently pays 17p per unit of electricity – with a monthly bill of around £4,700. This is expected to almost quadruple in the fall to 57p per unit.
- National Insurance: Employers paid 13.8%, but this rate increased to 15.05% from April 2022, an increase of almost 10% in the amount of NI paid.
- VAT: The UK government reduced the rate of VAT charged in the hospitality sector to 20% in April – an increase from 12%.
Fuel costs: The hospitality and tourism sectors are no longer allowed to use heavily discounted red diesel and will therefore face increased costs.
Staff and Suppliers: Food and beverage costs are rising while staff costs are also rising – with inflation over 7%.
Cooking oil: This is evidenced in the price of cooking oil which has risen from £19.99 a drum to £48 within weeks.
Mr ap Gwynfor said: “These increases and others like them are slowly killing these small businesses. They really fear that their business will soon no longer be viable.
“This is an example, which will be replicated across the country.”
In his letter to Mr Sunak, he calls on the Chancellor to act on VAT, energy costs and to reverse the National Insurance hike.
The MS has itself been criticized for backing a Welsh visitor’s tax which would increase the cost of holidays – but said this is currently up for consultation in the autumn and that it should be implemented at the earliest in the next fiscal year.
He added: “The hospitality industry has taken a beating over the past couple of years and staffing continues to be a big issue. The last thing the industry and the staff who work diligently in the sector needs, these are unnecessary cost increases.
“The government should be there to support the sector and not penalize it as we have seen in recent months. The UK government can reverse these damaging tax hikes and can reintroduce an energy price cap, as they made in France.
“As we see rising energy costs around the world, these are policy choices the government can make here at home.
“Not supporting the sector and those suffering from the cost of living crisis is a choice. I urge the government to support our people and our businesses by reversing these damaging decisions and providing urgent assistance in these difficult times. “
Prime Minister Boris Johnson’s plan for the year was set out in the Queen’s Speech and pledged to ‘strengthen the economy and lower the cost of living’.
Secretary of State for Wales, Simon Hart, said: ‘This is a Queen’s Speech to Wales and the whole of the UK.
“The rising cost of living is a priority for so many in Wales. The measures set out today for the next legislature will grow our economy as we recover from the Covid pandemic by creating more highly paid and highly skilled jobs and leveling the country. »
But the presented program has already been criticized for “lacking substance” and immediate measures to alleviate costs.
In Wales, the tourism and hospitality sector has criticized proposals for a visitor tax – a consultation due to start this autumn.
On the Welsh Government’s proposed tourist levy, Mr ap Gwynfor said: “There will be consultation in the autumn so at best some form of tourist levy will not be introduced until next financial year. This will not be a tax on business, but on visitors, part of their budget as they prepare to visit, just as visitors now have to pay £7.50 to park in the Brecon Beacons to climb Pen y Fan.
“Having looked at tourist taxes around the world, there are many different models, and most suggest very modest fees for smaller venues, like bed and breakfasts, etc. I really don’t think this will have an impact on the sector here, and could really benefit the sector.”