Commenting on the Chancellor’s budget announcements, Sacha Lord, Night Time Economy Adviser for Greater Manchester, said,
“Finally, the Chancellor has recognised the strength and importance of the hospitality sector. I am pleased to see the much-needed business rate discount and the introduction of tax reforms on alcohol, both of which will go far in helping hospitality operators, especially wet-led pubs, maintain a steadier footing while they recover.”
“I am disappointed there was no reference to extending the current 12.5% VAT rate for hospitality which will return to 20% in April next year and see a surge of operators closing under the weight of the increase.”
“Despite outward appearances and busy nightlife scenes across the UK, the sector is still struggling. Operators will take at least three years to recover from this pandemic and many remain in very precarious financial difficulties which could see them go under at any moment.
“Rises in inflation, supply chain issues and VAT increases are all burdens which are brutally impacting on an already beleaguered sector, and combined will result in venues closing, more staff being made redundant and tax bills left unpaid through bankruptcy.
“On top of this, reports of the impending Plan B measures are also affecting confidence. One thing we have continually asked for throughout this crisis is clarity and advanced notice. Venues are only just getting back to their feet, with the majority still in financial dire straits. To tease them with uncertainty over vaccine passports and the threat of working from home, which will undoubtedly see an exodus of customers for operators who rely on office workers for business, is yet another disservice to the sector.”
“The hospitality industry is vital to the UK’s recovery and growth, with nightlife alone representing £36.4billion to the economy pre pandemic. There is not one operator in the hospitality industry who hasn’t been negatively impacted by the past 20 months, and we have seen more than 86,000 employees leave the industry.”
“It’s imperative now that the Government continues to support the sector as it recovers.”
UKHospitality’s Chief Executive, Kate Nicholls, today said:
“We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the Chancellor’s move today to extend the 50% business rates relief for the hospitality and leisure sector for the next financial year. The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.
“The Chancellor’s announcements simplifying – and in many cases reducing – alcohol duties, are great news for pubs, bars and restaurants, and will benefit all. The Chancellor has shown real innovation and creativity in reforming an archaic system of duty, which we applaud.
“Positive as these announcements are, hospitality remains incredibly fragile, facing myriad critical issues. Rising utility bills, wage bills and food and drink prices have resulted in 13% inflationary costs that businesses are having to absorb at the same time as they navigate severe supply chain issues and chronic staff shortages. Given this toxic cocktail, it is imperative the Government go further to support businesses in our sector.
“The most effective way to achieve this would be to maintain the current lower 12.5% of VAT for the sector. The Chancellor has been bold and radical with alcohol duty – we urge him to adopt the same approach when implementing root and branch reform of business rates, to ensure industries share the burden equally.
“Hospitality has shown this summer that it has the potential to kickstart the nation’s recovery and deliver jobs, growth and investment at pace across all parts of the country but that could grind to a halt next year. It can only lead recovery with the right measures of support in place.”
