Britain’s night-time economy has welcomed Chancellor John Healey’s emphasis on growth and wealth creation but warned that further tax increases could accelerate business closures across an already struggling sector.
The intervention follows Mr Healey’s first major economic speech, in which he sought to place investment, profitability and economic growth at the centre of the Government’s agenda ahead of next month’s Budget.
Speaking in Coventry on Monday, the Chancellor said Britain was “turning a corner” and argued that the Government needed to create the conditions for businesses to invest, expand and generate profits.
However, his refusal to rule out further tax rises has added to uncertainty among businesses, according to the Night Time Industries Association.
The sector, which includes pubs, clubs, bars and other late-night venues, has faced almost six years of disruption, rising operating costs and increased taxation.
Michael Kill, chief executive of the Night Time Industries Association, said the Government’s rhetoric on growth would need to be matched by practical measures in the Budget.
“We welcome Chancellor John Healey’s quiet confidence in Britain’s potential and his recognition that successful, profitable businesses are essential to delivering growth.
“However, the continuing rhetoric around possible tax rises will concern businesses in sectors already facing exceptional pressure. The night-time economy needs room to breathe. After almost six years of disruption, rising costs and mounting tax burdens, the sector is now some 23,000 businesses lighter.”
Mr Kill warned that further closures would undermine rather than improve the public finances by reducing employment, investment and the tax base.
“There must surely be recognition within the Treasury that every business lost means jobs lost, investment cancelled and tax revenue permanently removed from UK plc. Business closures do not repair the public finances. They shrink the economy and reduce the revenue available to fund public services.”
The warning adds to growing pressure on Mr Healey from business groups ahead of his first Budget on October 28.
The Chancellor has made growth his central economic objective and has argued that greater public and private investment will be needed to improve Britain’s long-term economic performance.
However, concerns persist that additional tax rises could weaken business confidence at a time when companies are already grappling with higher employment costs and energy bills.
Mr Kill said the night-time economy was not seeking special treatment but needed greater certainty over its future operating environment.
“Our sector is not asking to be protected from commercial reality. It is asking for a fair and stable operating environment in which viable businesses have the confidence to invest, employ people and grow.
“If John Healey and the Government are serious about turning the corner, the forthcoming Budget must translate the Chancellor’s rhetoric on growth into practical action.”
He added: “That means easing the cumulative tax and cost burden on the night-time economy, providing long-term clarity and giving this vital sector the room it needs to recover.
“The night-time economy can play a powerful role in restoring growth across the country, but only if the businesses at its heart are given the chance to survive and succeed.”
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