GUEST COLUMN:
Hamish Watkins
Co-Founder
PIkkle
I have never been someone who comments publicly on political issues. Like most business owners, I’m usually too busy dealing with the day to day realities of running a business or bobbing and weaving my way through life's challenges. However, with that being said…
I co-founded PIKKLE during what has been one of the most challenging periods the hospitality industry has faced in decades. The idea was simple: to spice up corporate events by partnering with the best local food talent. Providing their food at events allowed us to deliver value to our clients while creating additional opportunities for the local food businesses we partner with, generating much needed revenue for them at a time when many were fighting for survival. Since then, I have had the privilege of working closely with independent food traders across the UK while also operating our own café business, Little PIKKLE in central Cardiff.
My position means I see first hand the challenges facing hospitality businesses from multiple perspectives. Whether it is a street food trader, an independent café, a restaurant or an events business, many are grappling with the same relentless pressures. Rising costs, squeezed consumer spending and increasing taxation have become a constant reality. Year on year margins continue to be eroded, bringing many closer to the proverbial cliff.
In recent months there has been considerable chatter about reducing VAT for hospitality from 20% to 10%, bringing the UK more in line with many European countries. While that debate is important and would be welcomed by many, I think the current business rates system also deserves greater attention.
For hospitality businesses, rates relief has been reduced from 40% to 15%. Combined with increases in rateable values, this has resulted in a 58% increase in business rates for our café.
What is particularly frustrating is that the calculation takes no account of factors such as opening hours or profitability. Whether a business is thriving or struggling, open seven days a week or only a few days, the bill is just determined by the location and use of the premises.
This increase comes on top of higher employers' National Insurance contributions, rising energy costs, skyrocketing food and produce prices, which consumers have experienced firsthand and continued pressure on consumer spending. It’s pretty unforgiving. These are the reasons that we continue to see bleak high streets and so many business closures.
The current business rates system just feels outdated. It places a significant burden on bricks and mortar businesses that are so important to local communities and the vitality of our town and city centres, while businesses operating online and without a physical premises are not subject to the same costs.
You’re also left wondering what these payments actually deliver when you still have to pay separately to get your bins collected.
If anyone is remotely serious about rebuilding high streets, business rates need serious reform. A modern system should be more nuanced, recognising factors such as profitability, much like corporation tax does, rather than relying on a model that just penalises physical premises.
The success of these types of businesses doesn’t just have an economic impact on local areas. These businesses are where community is found. They’re where people get to know their neighbours, build relationships and sometimes even meet their future partners. They are central to a thriving society and the fight against a world of continued isolation and the loneliness epidemic.
Independent businesses are already navigating enough challenges. We should be looking for ways to help them become more profitable, grow, employ more people and thrive. Not making it harder for them to survive.
