With business rates due to increase, VAT going up, energy prices on the rise and inflation pushing up food and drink costs, pub owner Sam Hagger is dreading the next few months.
“It is going to be catastrophic. There’s no other way to describe it,” says Hagger, the founder of the Beautiful Pubs Collective, which runs three venues in Leicester. “There’s a headwind on the horizon that we can’t deal with.”
That is, he said, unless the government takes action in Wednesday’s budget and three-year spending review. The chancellor, Rishi Sunak, is under pressure to keep VAT for hospitality and tourism – which was slashed from 20% to 5% during the Covid crisis – at its current interim rate of 12.5%, as well as extending the freeze on alcohol duties.
“The government needs to recognise the hospitality sector needs more support. For me, that would be to keep VAT for hospitality at 12.5% and major business rates reform,” Hagger says. “We’ve got groups that are lobbying for us and they’re doing an amazing job. But I’m not sure the government is listening.”
Despite the challenging times, Hagger is thankful his pubs are at least packed every weekend, as the city bounces back after a particularly challenging 18 months. Because it had the country’s highest rate of Covid cases, Leicester was the only part of England not to emerge from lockdown last summer, and businesses suffered a longer period of closure than anywhere else.
It was a worrying time, admits its mayor, Peter Soulsby, but “we were predicting a much more significant effect on the reputation of the city and the economy than ever actually transpired”.
As a result of its prolonged lockdown, Leicester became the first English council to set up its own coronavirus contact tracing team, which Soulsby attributes as the main reason behind the area’s current success at keeping cases down. However, council services are almost at breaking point, and Soulsby has little hope this week’s announcement will have much in it for local authorities.
“The government have, over the last decade, imposed unprecedented cuts on council services, and they’ve left us to make the difficult decisions and also take the blame. We’ve lost the equivalent of over £150m per year of spending power on our running costs over the last decade,” he says. “And there seems to be every prospect that in the comprehensive spending review and in the budget the trend will continue.”
He is particularly frustrated that much of the income generated by a recently announced national insurance increase will go to the NHS rather than council-run adult social care, which is desperately underfunded. But a big influx of cash won’t be enough to help the NHS either, which is already operating at unsustainable levels of strain, says Dr Anu Rao, a GP who works just north of Leicester.
“If you were to give me millions of pounds now to increase capacity across my primary care network, I won’t be able to do it because there just isn’t the workforce,” she says. “Everyone is already working their socks off, they just can’t offer more. We are almost running on empty at the minute.”
She wants to see a comprehensive long-term plan for the NHS, including a worker recruitment plan, with metrics that can be tracked. “I don’t want them to just say: ‘Oh, in five years we’ll have 10,000 more GPs’ – we’re not going to have 10,000 more GPs unless there is a properly thought-out plan.”
She feels that, with the worst of Covid seemingly over, the government appears to be in denial about how much pressure the NHS is still under. Others have similar feelings about the approach to policies outside health, such as the scrapping of the £20 universal credit uplift this month.
“Things are getting worse. More people are asking for more help now, and it’s hard to know what’s happening and where it’s going wrong,” says Mezmin Malida, who is heavily involved in charity outreach work in Leicester.
“I spoke to a lady today who was really upset. She’s lost £80 from her universal credit, she was turned down for a £500 test-and-trace support payment, and now she’s no longer working because childcare costs are too much.”
Malida has watched the people of Leicester suffer greatly throughout the pandemic but it is only in recent months that her charity, Rosemina’s Outreach Project, has started putting on two “feeds” a week instead of one. “Electricity and gas is going up. So people are now saying: ‘Oh god, wait a second, should I pay the bills? Should I feed myself? Should I feed my kids?’ That’s the kind of questions they’re asking now. People are worried and exhausted.”
She says she knows many people looking for work, although unemployment in the city has dropped since the start of the pandemic, with a 20% decline in universal credit claimants between 2020 and 2021.
The city’s garment industry hit the headlines last year because of poor working conditions and lack of regulation, and although the situation has improved, many manufacturers have shut up shop as a result. “We’ve had lots of people knocking on the door looking for work,” says Mick Cheema, the general manager of the clothing manufacturer Basic Premier Ltd.
He wants to see the government offering more support to manufacturing in the UK, especially with current supply chain problems holding up imports from abroad. “I think retailers should be given incentives to actually buy locally, whether it’s through taxation or whatever. There should be a benefit for them to buy in the UK,” he says. “I also think for environmental reasons there should be some form of barrier if you’re shipping things from far, far away, like a climate tax.”
Business is booming for some industries. Narinder Nijjar, a director of Fraser Stretton estate agents, describes work over the last 18 months as “relentless” thanks to the stamp duty holiday, although now it has ended he predicts a “levelling out”. “In a weird way, I feel a bit cheeky asking the chancellor for more because I feel the government have done so much for the sector over the past 18 months with the stamp duty,” he says. But he would like action from government to cut some of the “red tape” around housing development to help increase the housing stock.
But for other industries, Sunak’s announcement this week feels like – yet another – make-or-break moment on the journey out of the pandemic.
“Your head is so congested with all these different problems and you just think: is this going to get any easier?” Hagger says. “Am I just working myself into the ground for something that long term might not even be viable, through no fault of my own? Do we just call it a day now?”