Hospitality trade bodies welcomed the announcements, but the industry’s general reaction to the statement – which also included confirmation that VAT will be frozen at 20% until 2026, despite intense industry pressure to reduced – has been lukewarm at best. , with a lack of targeted support leaving many operators worried about the future.
UKHospitality accused the Chancellor of providing no plan for economic growth, while the British Beer and Pub Association (BBPA) warned that more support was needed to mitigate the impact of rising costs.
Elsewhere, Sacha Lord, Greater Manchester’s night economy adviser, has warned that operator squeeze could see venues close at a faster rate than during the pandemic.
“It is a very sad situation and there will be many extremely worried business owners in the UK tonight,” he said.
Jeremy Hunt outlines his vision
Speaking in the House of Commons this lunchtime (17 November), the Chancellor warned of tough times ahead, with GDP set to contract by 1.4% next year and inflation to remain above 7%.
A budget in all but name, it announced tens of billions in tax hikes and spending cuts, blaming the economic crisis on global factors, including the ongoing war in Ukraine.
“There is a global energy crisis, a global inflation crisis and a global economic crisis,” Hunt said.
“ But today, with this plan for stability, growth and public services, we will weather the storm. We do it today with British resilience and British compassion. Because of the tough decisions we are making in our plan, we are strengthening our public finances, reducing inflation and protecting jobs.
As part of his autumn statement, the Chancellor confirmed that the government will go ahead with a reassessment of properties for business rates, but will provide a £13.6billion package of business support ‘for soften the blow.”
The multiplier will be frozen in 2023-24, while relief for 230,000 businesses in the retail, hospitality and leisure sectors is set to rise from 50% to 75%, up to £110,000 per business .
In addition, the Chancellor announced a £1.6billion transitional aid package to help businesses adjust to the revaluation of their properties and cap bill increases for those who will see higher bills .
The government claims this will limit bill increases for smaller properties to 5%. Businesses that see their bills fall as a result of the reassessment will immediately benefit from this reduction in full, as the Chancellor has removed the caps on transitional downward relief.
Small businesses who lose their eligibility for small business or rural rate relief as a result of new property revaluations will have their bill increases capped at £50 a month thanks to a separate new scheme worth over £500 million.
In addition, the Chancellor announced that energy support will continue after April for the most vulnerable sectors, whose hospitality has already been recognized. However, further details on what form this relief will take have yet to be released.
He also confirmed reports that the National Living Wage would be increased by 9.7% from £9.50 to £10.42 an hour, giving a full-time worker a pay rise of over £1,600 a year. The national minimum wage will also see an increase.
“No economic growth plan”
Reacting to the autumn statement, Kate Nicholls, chief executive of UKHospitality, notes that UK hospitality businesses are already in the midst of a severe economic crisis.
“Survival this winter is the priority for sites across the country and there is a very real possibility that a significant proportion of our industry will not survive the winter,” she says.
“It was crucial that the government address this issue today.
“I am delighted the Chancellor has listened to the vast majority of UKHospitality’s proposals on business rates, covering a multiplier freeze, extended relief and no transition down. This means those who see their valuations fall will see the benefit immediately. on their bills, while increases are capped.
Describing the current system as outdated and inadequate, Nicholls continues that it is essential that the government sticks to its clear commitment to a comprehensive review of the business charging system, which is echoed by Emma McClarkin, chief executive of the BBPA . .
“It is right that the Chancellor has recognized the need to change our business pricing system and we welcome the extended and increased relief to 75% for pubs, so that they do not continue to be penalized by taxation unfair,” McClarkin said.
“Urgent grassroots and branch reform is still needed to ensure that corporate tariffs are appropriate for the 21stcentury ; the decision not to introduce an online sales tax, it seems that the government does not recognize the completely archaic nature of the current system.
Nicholls adds that what is now urgently needed is an economic growth plan with details on how business will be at the center of this.
“What we haven’t heard today from the chancellor is a plan for economic growth, although he recognizes its importance,” she said.
“Businesses are creating jobs, paying higher wages and contributing millions of dollars in tax revenue, but without a serious government plan, margins continue to be squeezed with no path to growth.
“There is nothing to give business confidence, let alone invest, and we need to see an urgent plan for economic growth and how business will be at the center of this. UKHospitality is ready to work with the government to develop such a plan and on the essential energy support package after April.
Frustration as calls to cut alcohol and VAT taxes ignored
Among the key areas hotel operators hoped to hear about in the fall statement were liquor taxes and VAT relief.
Hunt had already confirmed that the previous government’s planned alcohol tax freeze would be scrapped and made no mention of it today. Meanwhile, industry calls for a targeted VAT cut for the sector have fallen on deaf ears, with the Chancellor confirming it will remain at 20% until 2026.
“Failure to provide further relief to our industry today will hit pubs, breweries and their customers extremely hard this winter, and will have a devastating and lasting impact on communities across the country,” McClarkin said.
“Without a beer tariff or details of the dramatic rise in energy costs at the start of next year, pubs and brewers will still be forced to continue making incredibly difficult decisions. ‘they want to do is drive up costs for their customers; they want to remain a place of comfort, warmth and community, especially now when the country needs them most.
“The Chancellor says we must weather the storm together, but pubs and brewers are still facing a hurricane of costs leaving only destruction in its wake. Their costs have increased by 22% on average compared to last year, we are now losing 50 ads per month for good. As the entire country is thrust deeper into a cost of living crisis that shows no signs of easing, these companies have nowhere to go.
Lord adds that owners and restaurateurs will be deeply concerned by today’s fall statement.
“With these announcements, we will inevitably see a noticeable decline in consumer spending over the coming weeks and months, at a time when operators need support the most as they recover from the hangover of pandemic-related debt,” he says.
“Disposable income underpins our UK economy and I am extremely concerned that the policies outlined today will create a severe contraction in the sector. Luxury spending such as restaurant meals are understandably the first to disappear in times cutbacks and the hospitality sector is wide open to be the first to suffer.