Emergency budget – Truss must expand energy price cap to hospitality businesses

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The government must expand the planned energy price cap to SMEs and open lines of credit to enable Lancashire’s hospitality sector to survive.

That’s according to Adam Parton, partner at Lancashire accountancy and advisory firm MHA Moore and Smalley speaking ahead of a possible emergency budget planned by the new prime minister Liz Truss.

“The Prime Minister must act decisively to provide urgent support for hospitality businesses who face crippling energy prices,” said Adam.

“Her biggest priority should be to expand the planned cap on energy prices to include businesses, and cut VAT on energy bills for small and medium businesses from 20% to 5%, bringing it in line with the rate for consumers. This will provide businesses with far greater ‘buying power’ to negotiate long-term contracts with energy suppliers and come through the current crisis in one piece.”

While it yet to be confirmed by the Treasury, it’s thought an emergency budget or “fiscal event” could take place on Wednesday, September 21 or earlier.

Adam continued: “Businesses would also welcome a freeze or overhaul of business rates to help them better manage their medium-term costs and gain access to crucial government-backed credit, particularly as interest rates for mainstream capital remain at high levels and many businesses in the hospitality sector are sorely underfunded.

“The prime minister must provide equally strong support for consumers to ensure there is more money in people’s pockets. While the planned reversal of this year’s 1.25% rise in National Insurance is welcome, the government should go further and consider increasing personal allowances to help people retain more of their income. This will create more disposable income and possibly mitigate wage inflation which will in turn impact positively on businesses.

“Any measure which further dampens consumer demand will be a disaster for businesses just recovering from two years of Covid restrictions. Any procrastination on boosting consumer spending power may mean that businesses may not survive long enough to benefit any measure taken once the books have been balanced.”