Business leaders have pledged to work with the Isle of Government on a ‘way forward’ to protect the future of the island’s hospitality industry.

It comes weeks after trade representatives expressed concerns that bars, pubs, cafes and restaurants across the island were lurching towards a ‘crisis point’.

Last month an emergency ‘call to arms’ meeting was held at the Creg Ny Baa with members of the Licensed Victuallers’ Association (LVA), the Isle of Man Restaurateurs’ Association and representatives from the wider hospitality sector.

Those talks led to the LVA issuing a damning statement which called for changes to minimum wage legislation and taxes, a plea which was backed by the Chamber of Commerce who said that financial pressure was mounting on many businesses ‘day by day’.

Treasury Minister Alex Allinson and Enterprise Minister Tim Johnston met with representatives from the island’s hospitality industry late last month to discuss their concerns.

Both the Department for Enterprise and the island’s LVA have joined forced to issue a joint statement on those talks.

Tim Johnston MHK, Minister for Enterprise, said: ‘It is clear that the collective voice of the industry is that there is a need for Government to act quickly to mitigate concerns raised by the hospitality sector, as well as to maintain a dialogue to secure the continued vibrancy of the Isle of Man’s hospitality offering over the short, medium and long term.

‘We are listening, and I am keen to ensure the communication lines remain open with the sector.

‘As such, I have asked the Business Agency to continue this momentum and work with representatives of the sector to develop options for a way forward as an absolute priority which are affordable, sustainable and fair.’

Some of the concerns recently voiced by leaders in the island’s hospitality industry were discussed during last week’s House of Keys sitting.

Questions were raised by members regarding what the Department of Enterprise and the Treasury could do to support businesses.

One suggestion was to lower the level of Value Added Tax (VAT) levied on Manx businesses.

The Isle of Man’s VAT rate is currently set at 20%, the same as it is in the UK although what we pay is significantly higher than the other Crown Dependencies because they don’t have the tax-sharing agreement that we do with the UK.

In Jersey, the VAT figure is 5% while in Guernsey there is no VAT or any other consumption tax.

But Treasury Minister Dr Alex Allinson said reducing the VAT rate was not a viable option.

He said: ‘The VAT sharing agreement we have with the United Kingdom is crucially important to government finances, making up around 28% of our annual income.

‘VAT revenue from the hospitality sector is a large proportion of the total, and this revenue is used to fund general expenditure. Any reductions in the rate, whether temporary or permanent, needs to be offset from elsewhere through additional taxation or a reduction in services or expenditure.

‘There are various groups in the United Kingdom who have similarly been lobbying the UK Government for VAT rates in the hospitality sector to be reduced to 12.5%. Were that to happen in the UK, we would follow suit because of the VAT sharing agreement.’

In the joint statement released last week, Andy Gibbs, Chair of the LVA said the hospitality sector welcomes the acknowledgement from government.

He said: ‘This week has seen further conversation with the Isle of Man Government.

‘Our concerns were made clear in our press release, and we have agreed to now work with the Department for Enterprise to develop more detail around options for support which will achieve the desired outcomes for our industry.

‘This will allow us to maintain and improve our offering for residents and tourists, whilst being able to operate as commercially viable businesses – and importantly before the TT Races in the coming weeks.

‘We have also agreed on a structure to support a cohesive voice for the sector going forwards.

‘We welcome the acknowledgement of our concerns by government and hope the message that we need support quickly if our businesses are able to survive has been received.’