‘Cost Of Doing Business’ Crisis Leads To Action Plan

We have long talked about the incredible pressures that businesses have been coming under over the last few months, with escalating prices for raw materials and ingredients, calls for higher wages to keep up with the rises in inflation, huge increases in energy bills with no end in sight, and a drop in demand for goods and services due to the cost of living crisis. All this has led to a real ‘cost of doing business’ crisis.

Calls For VAT To Be Reduced To 17%

Now various trade organisations, including Hospitality Ulster and Retail NI, have got together to form an action plan to help deal with this urgent issue. They want VAT to be quickly reduced to 17% and also the reduced Tourism/Hospitality VAT rate to be reinstated to support businesses that rely on household discretionary disposable income and tourism revenue.

Here are some of the other measures they are proposing, as copied from an article on the Belfast Telegraph website:

• The restoration of the Business Rates Holiday which concluded in July 2022, running until April 2023.
• A UK wide reform of the business rates system to ensure online and out of town businesses are paying the same rate as high street businesses.
• Support from the UK Government for the devolved nations to reduce business rates by providing increased financial support through the block grants.
• The removal of VAT from energy bills to reduce energy costs.
• The Northern Ireland Executive to establish a Rural Town and Village Infrastructure Investment Fund to ensure our small and mid-sized towns and villages are supported during this economic crisis.

Thousands Of Businesses Threatened If No Action Is Taken

The 15 business organisations behind the plan have put out a joint statement about the crisis, again copied from the same website, which says:

“[It] could see thousands of businesses threatened over the next months if no action is taken,” they said.

“Out of control energy bill increases, labour shortages, inflation, National Insurance increases, and sky-high business rates – the highest in the UK – are risking the business climate of Northern Ireland.

“Fears that many will simply go under in the next months without government assistance are keenly felt and we cannot continue on this path of destruction any longer.

“We are pushing customers away due to having to raise prices to keep pace with these rising costs, which is therefore having a detrimental impact on trade and consumer confidence.

“Intervention is required by the UK Government, as well as the limited powers of NI Executive Ministers, to stave off the worst of this crisis on business owners and provide tangible support and resources that could keep trade viable.”

They went on to say that:

“Actions including a reduction in the VAT rate to 17% to encourage more households to spend on the high street; increased financial assistance through the block grant to alleviate the cost of business rates; and the implementation of the NI High Street Taskforce Report will help bolster business back to viable trading levels,” they explained.

“We call on both Governments to consider our proposals and engage with the business community on how best to implement urgent actions that can alleviate these crippling pressures.

“It will support both businesses and consumers in this most pressing of times.”

These proposals are very welcome and they need to be implemented as soon as humanly possible.