Chancellor must provide ‘missing ingredient’ for Lancashire’s hospitality sector, says MHA expert

A leading advisor to hospitality and tourism businesses in the region has called on chancellor Rachel Reeves to use her Budget to restore confidence to the sector.

Colin Johnson, partner at accountancy and advisory firm MHA, which has offices in Preston and Lancaster, believes this Budget represents an important opportunity to deliver stability to a sector that contributes billions to the UK economy but continues to feel the pressure.

The chancellor delivers the autumn budget on Wednesday, November 26, and taxes are widely expected to increase to help meet the government’s fiscal rules.

But Colin, who has been advising leisure and tourism businesses for more than 25 years, believes there is an opportunity to provide targeted relief for the sector.

He said: “For many, the last few years have felt like a perfect storm of rising costs, shifting consumer behaviour and economic uncertainty. Inflation may be easing, but few hospitality operators would describe the cost environment as returning to normality.

“Food and drink costs remain significantly higher than pre-pandemic levels, energy bills – though not as severe as last winter – are still materially elevated, and wage and National Insurance increases continue to push up staffing costs. Passing those increases on through higher prices is risky in a market where consumers are already cautious about discretionary spending.

“While economic growth was the government’s stated priority when it came to power in 2024, recent measures have done little to bolster confidence. Both consumer and business sentiment remain fragile. Many operators say their biggest challenge isn’t just cost, but uncertainty. The stop-start nature of policy changes - whether on tax, employment, or sustainability – makes long-term planning difficult.

“There are of course no easy answers, but confidence breeds spending and the chancellor needs to send a clear message that the UK is a stable environment for investment and growth.

"A coherent, long-term economic plan, one that doesn’t swing from one philosophy to another, would go a long way to reassuring both businesses and households.”

Colin believes the Budget presents an opportunity for the government to deliver practical support that encourages spending and investment, such as a reduction in VAT on tourism related activity.

Colin added: “The UK remains an outlier among major tourism economies in applying the full standard rate to hospitality businesses.

"Ireland, for example, has repeatedly lowered VAT for its hospitality sector to stimulate demand and support operators, and with measurable success.

"The Treasury could consider a similar targeted approach to help rekindle consumer activity and competitiveness, though having spent the last 15 years calling for this, I won’t be holding my breath.

“Business rates are another long-standing burden, particularly given outdated property valuations and inconsistent relief schemes.

"Any re-rating or withdrawal of reliefs must be handled carefully to avoid further destabilising the sector. Keeping meaningful rate relief in place, particularly for smaller, regional operators, would be a tangible sign of support.

“On the investment side, capital allowances could be used more strategically. The previous “super-deduction” encouraged new investment, but future incentives might be better targeted at sectors like tourism and hospitality, especially for spending that drives sustainability or improves energy efficiency.”