Heat is on as VAT rise starts to bite

February 2, 2013 No Comments

10ADifficult trading conditions have turned up the heat on Cheltenham’s curry restaurants and trade is said to have declined by 35 to 40 per cent at some venues. Spice restaurant owners in the town have come together to urge the Government to cut VAT in order to give their businesses a much-needed boost.

Mohammed Rahman, who runs The Spice Lodge, said trading conditions were the toughest they had been for years. He points out,”It is very tough at the moment. The fact is that people have less money at their disposal so are not able to eat out as often.”

The rise in VAT and high business rates have added to the pressures. Mr Rahman adds, “We have had to cope with VAT going up from 17.5 per cent to 20 per cent but we can’t put prices up as that wouldn’t be fair on customers. We want the Government to look at this because people need all the help they can get. We also want councils to look at lowering business rates because that is another cost on top of everything else.”

It is not just Cheltenham that is affected, but spice restaurants in towns and cities across the country. Recently there have been reports of a wave of closures in iconic Brick Lane, which has seen some businesses experience a 40 per cent drop in trade. Azmal Hussain, who runs Preem & Prithi, comments, “The prices have stayed the same since the rise in VAT so we are paying out of our own pockets. It can’t go on.”

Brick Lane also suffered poor results during the Olympics and traders have complained that putting tarmac over the street’s cobble stones has hit trade as well. There have also been claims that aggressive touting is hurting business by putting off customers.

Peter Backman, from market data firm Horizons, says the problem is widespread. He adds, “People have less money and slightly fewer go out to eat. Customers are becoming far more selective and are choosing places that do heavy marketing and discounting, which tends to be the better-funded chains not independents.”

Leaders of Britain’s £3.6 billion a year curry industry have written to Prime Minister David Cameron and Chancellor George Osborne urging them to cut VAT to stimulate business. British Curry Awards founder Enam Ali, chairman of the Guild of Bangladeshi Restaurateurs, has said: “Even a small reduction in the 20 per cent VAT rate on restaurant meals could make all the difference between restaurants surviving or going to the wall. It could encourage customers to start spending again. We need the Government to act and to do so soon.”

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