By Stephen Patterson, Chief Executive of NE1 Ltd, the Business Improvement District company for Newcastle city centre
Newcastle City Council has taken the momentous first step towards repealing the Late Night Levy, a decision that should be welcomed by everyone who cares about the future of our city centre economy.
Introduced in 2013, the late night levy is a throwback to different times and a very different Newcastle. At the time, the city’s night-time economy was dominated almost exclusively by vertical drinking venues with ‘trebles for a pound’ and similar drinks promotions the norm.
This culture, it was thought, placed additional pressures on policing and council resources at night. The Council’s own justification for introducing the levy described the city’s nightlife as “dominated by high volume, vertical drinking establishments placing the greatest demand on police resources at night.”
Fifteen years on, Newcastle has changed beyond recognition.
The city that once had 14 nightclubs now has only four. Gone are the high-volume drinking venues that defined Newcastle’s nightlife. In their place has emerged a more sophisticated hospitality environment, based largely around food, experiences, and quality. Operators have invested millions of pounds transforming their venues and their offer to meet changing customer demand and to accommodate the cultural shifts towards wellbeing, premium experiences and a different approach to socialising.
Our hospitality sector has evolved, the Levy has not.
Businesses selling alcohol between midnight and 6am in Newcastle city centre still pay up to £4,400 every year through the levy, despite facing the toughest trading conditions in living memory. The two recent catastrophic budgets have imposed hideous financial pressures on the hospitality and leisure sectors through higher tax and wage bills on top of spiralling energy bills and rising costs. The Business Rates re-evaluation nationally and the loss of rates relief compounded this financial crisis with some venues facing staggering rate rises of up to 660%. Many have folded under the financial burden placed on them by the state. In the last twelve months alone, we have lost 16 venues in Newcastle and even more are just about managing to keep their head above water for now.
Margins across hospitality are now paper thin. Industry figures suggest pubs make as little as 14p profit on each pint. A venue paying the highest rate of late night levy would need to sell 31,000 pints to cover the cost of this outdated tax liability.
Newcastle has become a clear regional and national outlier in the late night levy stakes.
No other city in the North East imposes it. Sunderland and Durham operate without it and remain safe. Major cities across the UK, including Manchester, Leeds, Sheffield and Bristol manage thriving and safe night-time economies without imposing the levy. Cheltenham, Southampton and Nottingham recently abolished theirs to support their hospitality businesses, valuing the sector as an asset not a burden. Newcastle risks falling behind these and other cities where the levy has been abandoned by proactive councils keen to support their hospitality sectors.
This raises a fundamental question, what makes Newcastle exceptional enough to justify retaining the tax?
The answer becomes harder to justify when examining the city’s own safety data.
Newcastle City Council and Northumbria Police’s own statistics show that Newcastle is a remarkably safe city, particularly given the scale and success of its night-time economy. In fact, much of the available data supports the case for abolishing the levy, showing that the associated crime levels are actually higher during the day than they are post-midnight.
The reality is that Newcastle is rightly recognised as one of the safest cities in the UK and yet the levy is still imposed. The tax also raises such insignificant sums when compared to the overall policing budget that the suggestion that Newcastle’s safety would be compromised by abolishing the levy bears no scrutiny. Other major cities achieve the same or better safety outcomes without the tax.
After all, hospitality is one of the highest taxed sectors in the UK, and general taxation already contributes to the cost of providing a safe trading environment. Imposing an exceptional tax, needs an exceptional justification. This is why the council’s decision to commit to an independent consultation and levy review is so very important. It highlights the council’s partnership approach and willingness to listen to feedback from businesses and NE1 through the newly reinstated Licensees Forum which called for this review. It is only by working together that we can secure the future of the sector, ensuring it is safe and can thrive.
Licensees who have shouldered the burden of the levy for over a decade will finally have their say and will be able to explain how it affects their businesses. The consultation which runs until the end of June gives the council the chance to reassess whether a policy designed for the Newcastle of 2013 can still legitimately be applied today. We will be giving our views to the consultation, and we have confidence that the council will see the unfairness of the scheme and belatedly remove it.
The case for the levy was tenuous at best. Now it is virtually non existent and increasingly impossible to defend.
Newcastle’s hospitality sector is one of the pillars of the city’s economic and cultural success. It supports thousands of jobs, drives tourism and helps make Newcastle one of the most vibrant cities in the UK.
At a time when businesses are facing the toughest economic trading conditions in history, removing an outdated and unjustifiable tax is not just sensible policy, it is the right and moral thing to do. It is time to scrap it.
www.newcastlene1ltd.com
