SNP write to UK Chancellor Nadhim Zahawi for business support package during energy crisis
The SNP has called on the UK Chancellor to bring in targeted support to assist the hospitality sector through the cost of living crisis.
In a letter to Nadhim Zahawi, Douglas Chapman MP, SNP Small Business spokesperson, warned that without additional UK government support businesses could be crippled under increasing energy costs and lack of trade induced by rising pressures on household incomes.
Mr Chapman has called on the Chancellor to reintroduce the 12.5 per cent rate of VAT for leisure and hospitality businesses, take steps to restrict energy price rises from increasing further and encourage UK workers to take up roles in the hospitality sector to fill vacant posts.
Regulator Ofgem warned the Government on Friday the government must act urgently to "match the scale of the crisis we have before us" as Britain faced the news that the average household's yearly bill will rise from £1,971 to £3,549.
The Scottish Chambers of Commerce had pleaded for support for businesses in the build-up to the energy price cap announcement, calling on the Scottish Government to provide a relief package similar to that delivered during the Covid-19 pandemic, and to ensure the non-domestic rates (NDR) revaluation goes ahead as planned next year.
Mr Chapman said: “The resilience our hospitality sector displayed throughout the pandemic was remarkable, but it would have been nigh-on impossible without the significant government support that was delivered by both the Scottish and UK governments.
“If we’re to ensure the survival of the hospitality businesses we know and love, safeguarding jobs and livelihoods in the process, then we must see the UK government adopt a similar approach and response to this Tory-made cost of living crisis.
“So far they’ve done nothing to help businesses who are set to be shafted by rises to energy bills that will see firms paying 400% more for gas and electricity, and have done nothing to prevent a loss of trade from the hit households are taking to their incomes.
“Failure to act will result in a decades-long legacy of businesses in ruin, sky-rocketing unemployment, and barren high streets and towns.
“This is largely a crisis of the UK government's own making - it’s time now they step up to the plate and offer the support that’s needed.
“If they won’t do that it’ll go to show, once again, why only with the full powers of independence can we fully support our treasured hospitality sector and the people upon whose income it depends.”
In an interview with the Daily Telegraph, Mr Zahawi said he is weighing up potential action to help small firms including the Covid-style cuts to VAT and business rates to support the hospitality and leisure sectors.
Mr Zahawi said a failure to help small and medium enterprises may potentially lead to a “longer-term scarring effect on the economy”.
He said: “So what we did on business rates, what we did on VAT for particular sectors like hospitality. So we’re working up all those options to look at those.
“And of course Liz Truss has talked about removing a moratorium on the green levies for a couple of years. We’re looking at that as well, which will help everyone with about £150.”
Tracy Black, CBI Scotland director, told BBC’s Sunday Show both governments need to step in to prevent businesses from closing and to encourage economic growth.
Ms Black said: “Raw materials have become more expensive, freight costs are more expensive so there’s real pressure on businesses and it’s not set to get better over the coming months.
CBI Scotland has asked the government to commit to business rate freezes and flexibility in paying loans with a pandemic loan scheme expanded.
The body has also asked for the industrial energy transformation fund to be expanded to help businesses use less energy and help households with bills.
Following the announcement of the energy price cap hike on Friday, Scotland’s energy secretary Michael Matheson said Ofgem needed to intervene to help support SMEs and the energy costs they were facing. However, he was unable to say whether or not the Scottish Government's commitment to ensure the NDR revaluation due to take place in 2023 would go ahead.