Wed 22nd Nov 2023 - Sector leaders warn two thirds of industry still facing business rates hike despite extension of relief Sector leaders warn two thirds of industry still facing business rates hike despite extension of relief, lack of VAT reduction seen as ‘missed opportunity’: Sector leaders have warned that two thirds of the industry are still facing a business rates hike despite an extension of relief in today’s autumn statement. Chancellor Jeremy Hunt announced business rates for the sector will remain frozen for another year, while all alcohol duty will be frozen until August 2024. UKHospitality chief executive Kate Nicholls said: “The chancellor has brought forward a significant package of business rates measures that will help hospitality businesses across the country. The decision to freeze the small business multiplier will help those most vulnerable keep the lights on. However, the standard multiplier rising by 6.4% will see businesses representing almost two-thirds of the sector’s trade still facing a £150m rates hike. This will only put more pressure on consumer prices and inflation, at a time when businesses are still grappling with high costs of energy, food, drink and wages. We’re pleased that the chancellor has also acted on our proposal and frozen alcohol duty until August next year. This is now one less cost that venues have to worry about. While it’s disappointing that employer contributions to national insurance have not also been cut, the reduction in national insurance for employees will put more money in people’s pockets and provide a boost to hospitality in the new year, often a challenging time for the sector.” Hunt made no mention of a reduction in VAT, which has been seen by some as a “missed opportunity”. Michael Kill, chief executive of the Night Time Industries Association, said: “The absence of VAT measures in the autumn statement is a missed opportunity to spur investment and growth in the hospitality, night-time economy and creative sectors. A VAT reduction, along with thoughtful considerations for rising labour costs, would deliver much-needed relief and send a positive signal to businesses, elevating confidence and fostering an environment conducive to long-term planning.” Gusto chief executive Matt Snell tweeted: “As expected, there is nothing in this budget for SME hospitality businesses apart from a 10% increase in wage cost. As an industry, we need to have a fundamental rethink on how we communicate with government as the current approach isn’t working.” Gary Usher, founder of Elite Bistros, tweeted: “The lack of support today from the government means most independent hospitality businesses will have to make redundancies, close services and source inferior produce. It’s a perfect storm for closures.” Sarah Rayment, co-head of global restructuring at Kroll, said: “Company administrations are tracking 30% higher than last year and retail, hospitality and leisure businesses are high up that list because they are generally more exposed to consumer confidence, energy costs, cost inflation and higher interest rates. Clearly today’s news will be welcome by some, but given the lobbying effort from industry, many will feel it does not go far enough. The rate relief and rates multiplier will only apply to smaller hospitality and retail businesses, therefore for companies with larger outlets or multiple stores, it’s likely that we will see more insolvencies.” Meanwhile, those operating and representing wet-led businesses were toasting the statement. Emma McClarkin, chief executive of the British Beer & Pub Association, said: “We wholeheartedly welcome the chancellor’s decisions to freeze beer duty until August 2024, freeze the small business rates multiplier, and maintain a business rate relief of 75%, both vital lifelines for the sector. These policy decisions will save our sector around £350m. This investment in our sector is critical, particularly as national living wage increases – at more than double the rate of inflation – will add over £240m to pub wage bills at this challenging time.” Chris Jowsey, chief executive of Admiral Taverns, said: “Over the past few challenging years, pubs up and down the country have proven their importance as social hubs for their communities, working tremendously hard to overcome every obstacle that has been thrown at them and yet they have continued to be one of the most heavily taxed business sectors in the UK. We welcome the measures announced by the chancellor, including a freeze on beer duty and an extension to the business rates relief which will reduce the unfair tax burden and provide many pubs with an opportunity to trade out of this economic crisis.” Steve Alton, chief executive of the British Institute of Innkeeping, said: “We welcome the news that business rates relief for the retail, hospitality and leisure sectors will be continued at 75%. We also welcome the freeze on alcohol duty. However, as small businesses at the heart of their communities, many run by independent operators, the rise in the national living wage to £11.44 per hour will hugely impact the profitability of their venues.” Campaign for Real Ale chairman Nik Antona said: “Freezing all alcohol duty until August 2024 is certainly to be welcomed. However, this is a missed opportunity to give targeted help to protect the nation’s pubs, social clubs and taprooms by cutting tax on draught beer and cider served in pubs instead of an across-the-board freeze in all alcohol duty.” Paul Davies, chief executive of Carlsberg Marston’s Brewing Company, said: “We are pleased to see the government respond to industry calls to refrain from imposing further increases to the headline duty rate for beer and to maintain the hospitality business rate relief.” Phil Whitehead, managing director for Western Europe at Molson Coors Beverage Company, said: “Having already seen a headline duty increase in August, a further rise would have been a hammer blow to the sector, so this announcement, combined with action on business rates, will help to protect the future of much-loved venues and breweries and give the industry a platform to drive long-term economic growth.” Brian Perkins, chief executive of Budweiser Brewing Group UK&I, said: “We are pleased that the government is acknowledging the inflationary impact of excise taxes by freezing beer duty, however, the UK still taxes beer more than most European countries and British beer drinkers still pay the third highest beer tax in Europe.” Nuno Teles, managing director at Diageo GB, said: “Today we raise a glass to the chancellor and the prime minister, who have listened to the industry’s plea for support and decided to back our homegrown sector, that employs so many people across the UK.” Hunt said in his statement his business rates measures would “save the average independent pub over £12,800 next year” and that “the cost of £4.34bn is a large tax cut which recognises the role of pubs and high street shops in our communities.” However, he warned: “It’s not possible to continue with temporary support measures forever.” On alcohol duty, Hunt said: “As well as confirming our Brexit pub guarantee, which means the duty on a pint is always lower than in the shops, I have decided to freeze all alcohol duty until 1 August 2024. That means no increase in duty on beer, cider, wine or spirits.” Hunt also announced the abolition of Class 2 National Insurance for the self-employed, and that Class 4 National Insurance for the self-employed would be cut by one percentage point to 8%. He also announced £50m in funding over the next two years to increase the number of apprentices in key growth sectors. Hunt also committed to reforming the planning system to allow for faster planning applications. He added that for every £1 that a business invests in IT, machinery and equipment, they can claim back 25p in corporation tax.