More needed from government, as trade reacts to budget
The chancellor has announced his Autumn Statement, triggering reaction across the hospitality industry.
The chancellor Jeremy Hunt has announced his Autumn Statement, triggering reaction from pubs, bars and the rest of the hospitality industry.
Most relevant to the sector, a £13.6bn package of support for business rates payers in England was announced. The multiplier will be frozen in 2023-24, while relief for 230,000 businesses in retail, hospitality and leisure sectors was also increased from 50% to 75% next year.
To help businesses adjust to the revaluation of their properties, which takes effect from April 2023, the chancellor announced a £1.6bn Transitional Relief scheme to cap increases for those who will see higher bills. This limits bill increases for the smallest properties to 5%.
Businesses seeing lower bills as a result of the revaluation will benefit from that decrease in full straight away, as the chancellor abolished downwards transitional reliefs caps. Small businesses which lose eligibility for either Small Business or Rural Rate Relief as a result of the new property revaluations will see their bill increases capped at £50 a month through a new separate scheme worth over £500m
Elsewhere, the National Living Wage is set to be increased by 9.7% to £10.42 an hour, giving a full-time worker a pay rise of over £1,600 a year.
Income Tax, Inheritance Tax and National Insurance thresholds will be frozen for a further two years until April 2028. The Dividend Allowance will be reduced from £2,000 to £1,000 next year, and £500 from April 2024 and the Annual Exempt Amount in capital gains tax will be reduced from £12,300 to £6,000 next year and then to £3,000 from April 2024.
The most profitable businesses will also be asked to bear more of the burden. The threshold for employer National Insurance contributions (NICS) will be fixed until April 2028, but the Employment Allowance will continue to protect 40% of businesses from paying any NICS at all.
Energy support will continue post-April for the most vulnerable sectors, of which hospitality has already been recognised.
“The chancellor painted a grim picture of what we’re facing as a nation and Britain’s hospitality businesses are already in the midst of severe economic turmoil," says CEO Kate Nicholls.
“I’m pleased that the chancellor has listened to the vast majority of UKHospitality’s proposals on business rates, covering a freeze in the multiplier, extended reliefs and no downward transition. This means those seeing their valuations decrease will see the benefit in their bills immediately, at the same time as increases are capped.
“However, it remains the case that the current system is outdated and not fit-for-purpose. The government made a manifesto commitment of root and branch review and it’s essential that this delivered as soon as possible.
“It was also encouraging that the chancellor confirmed that energy support will continue post-April.
“What we failed to hear today from the chancellor was any plan for economic growth, despite him recognising its importance. Businesses create jobs, deliver higher wages and contribute millions in tax revenues but without a serious plan from the government, margins continue to be squeezed without a path forward to growth.
“There is nothing to give firms confidence, let alone invest, and we need to see an urgent plan for economic growth and how business will be at the centre of that."
“Today’s statement from the chancellor offers little immediate comfort to our members, all of whom are facing the most challenging and critical times for their businesses," says CEO Steve Alton.
“We welcome the news that business rates relief for the Retail, Hospitality and Leisure sectors will be continued and increased to 75% for 23/24, in line with our consistent calls on government for ongoing support in this area.
“However, energy price rises are crippling these vital and viable businesses, and while the current Energy Business Relief Scheme (EBRS) offers some support, for many, it is having a limited impact in terms of mitigating the huge cost increases they are bearing. The scheme only addresses a discount on actual energy usage, and other increased costs such as management fees and standing charges mean that bills have risen in real terms by well over 200% and in some cases up to 700% in comparison to 2021.
“Our essential bricks and mortar businesses must be recognised as extremely vulnerable, and while we await the review of the EBRS scheme at the end of this year, we will continue to take the financial realities for our members to key government departments, making the case for the ongoing, meaningful support that is urgently needed.
“While the support for those more vulnerable individuals in the form of a rise in the National Living Wage is welcome for staff, these additional, unavoidable costs for our members, without further support from government, could be the nail in the coffin for many small businesses. As the public face their own cost of living crisis, pubs cannot simply pass these rapidly escalating costs through to their customers."