5
December
2022
December 5, 2022
It will be of no surprise that it is the most deprived areas of England that are being hit hardest by the cost of living crisis. With the hike in costs and inflation hitting 11.1% in October, recent surveys from the Office For National Statistics show that the impact of inflation is disproportionately affecting poorer areas, where an already limited income is struggling to meet the demands of these cost increases. Hospitality businesses in these areas can therefore expect a dramatic loss in customers, unless the government steps in to support individuals and boost spending.
Of course, there will be an increase in people looking for additional work, and Brigad’s platform for freelancers is an ideal way for these workers to take on additional hours without sacrificing their other commitments. And whilst custom may be falling this winter, UK hospitality still predicts custom to be much higher than pandemic levels - some good news, then. Christmas is expected to bring people out and into hospitality businesses, although numbers are expected to fall again once the energy cap is lifted in April. Both businesses using Brigad and Brigad’s self-employed professionals should still enjoy the extent of work available over the festive season.
Who is being affected most by the cost of living crisis?
In the poorest areas of England, 84% of people surveyed by the ONS stated that they would struggle to keep up with the price hikes, and would have to take serious measures to cut costs, such as going without heating and going without “essentials.” This is not good news for hospitality businesses - less money to spend on essentials will mean a dramatic drop in spending on food and drink. On the other hand, in more affluent areas, only 2% of people reported to be worried about the increased costs, which does bode well for hospitality in businesses in these affluent areas, and across cities themselves.
It has been left to city and town councils to issue their own Emergency programmes - Birmingham’s programme aims to use £5m to “increase energy efficiency, increase food bank availability and implement warm spaces across the city.” However, once again, smaller towns and poorer areas of the country will not have this money to spend on aid.
Data shows that the areas hit hardest by the cost of living crisis are overwhelmingly concentrated in the North and Midlands, “typically on the outskirts of post-industrial towns and cities, as well as in coastal areas of the south-east. They are home to about 2.4 million people.” Here, 58% of people have reported to have been unable to purchase their “essentials'' - and whilst “mutual aid” food banks and other community-driven schemes are available to offer help, this aid is predominantly available in the poorer areas of bigger cities, not the post-industrial towns where people need help most. Furthermore, many of these food banks and charity organisations are being forced to close due to the inability of paying rent, such as Sheffield’s food bank charity FOODHALL, which had to close its doors this month after seven years of distributing food to the needy.
The Government’s response - support and advice
Whilst energy prices are currently subsidised by the government, Jeremy Hunt announced that this is to end in April, when prices for energy are expected to soar. The government is rushing to release informational campaigns on how to reduce spending - the main focus on this is for reducing energy usage, this includes a “£25m advertising and social media campaign before Christmas to encourage people to save money and energy.” Their advice covers “reducing the temperature of boilers, which could save £80 (a year), turning off radiators in empty rooms, which could save £105 (a year), and switching off electrical devices rather than leaving them on standby, which could save £55 (a year).” The total sum of these savings is £420 annually, which business owners in the hospitality industry know is a fraction of the cost of heating and providing food and drink 6-7 days a week. The government is using average household energy costs to calculate price hikes, however, clearly this does not reflect energy use by businesses.
As UK Hospitality states: “In addition to rocketing energy prices, for example, operators are facing a 19% rise in labour costs; a 17% hike in food prices and a 14% growth in drink prices. While many are trying to absorb as much as they can, operators are expecting to have to pass on an 11% increase in prices to consumers.”
Of course, businesses will have to pass on costs of produce and other expenses on to their customers - resulting in the price hike for all menu items. However, the producers of the ingredients will also have to pass on their own growing costs to buyers. The passing on of cost and debt is creating a divide and building tension within the chain of food production, as every business in the link from farm to plate has to raise prices. Unluckily, the rate of expense falls most heavily on the customer. The only way to stop this chain of inflation is for the government to step in and limit price hikes, or offer additional aid.
The Government has issued a “Energy Bill Relief Scheme” (EBRS) for businesses to get relief on gas and electricity this winter. The support is available until March of 2023. Besides this, the government does not currently have schemes in place to directly help businesses through the cost of living crisis. There are other relief schemes for pensioners and vulnerable people - businesses will have to hope that relief given to these individuals will relieve some financial pressure off, allowing money to be spent in the hospitality businesses.
We know we can’t directly solve the economic crisis, but Brigad is always available to offer support and advice when possible. With our core values of Impact and Care, we are always here with a kind ear and trusting voice to support you when facing arduous times. Our main aim is to build a community within the industry of familiar faces and close friends. Plan ahead, post a mission in advance and support one another during these strenuous and pocket-clenching times.
