Kwarteng told the House of Commons the proposed energy support package will cost £60bn for the six months from October but gave no further details on the scheme.
Michael Kill, chief executive of the Night Time Industries Association (NTIA), said businesses have been “left out in the cold” by the move.
Kill said: “We are extremely disappointed with the chancellor's announcement this morning. It will be seen as a missed opportunity to support businesses that have been hardest hit during this crisis, causing considerable anxiety, anger and frustration across the sector as once again they feel that many will have been left out in the cold.
“We have been extremely clear with the Government that the Energy Bill Relief Scheme, even with the announcement of the limited tax cuts on national insurance, corporation tax and duty, is unlikely to be enough to ensure businesses have the financial headroom to survive the winter, especially with Thursday’s announcement of the rise in interest rates from the Bank of England.
“I would urge the chancellor and Government to reconsider these measures, given the limited impacts of the current tax cuts on the immediate crisis for many businesses across the sector, the extremely vulnerable position the night-time economy and hospitality sectors remain in, and re-evaluate the inclusion of general business rates relief and the reduction of VAT within these measures.”
Major levers overlooked
UKHospitality chief executive Kate Nicholls said: “The stated objectives of boosting growth and tackling inflation rightly put business at the heart of the Government’s agenda, but today’s measures will take time to take effect.
“The chancellor committed to making the UK a globally competitive tax regime, yet overlooked two obvious levers to achieve that, through lower VAT and business rates reliefs. Our VAT rate is the highest in Europe, which is starkly at odds with ambitions for global tax competitiveness and will hopefully be addressed in the autumn Budget, if not before.
“While tax-free shopping for overseas customers is a welcome step to attract overseas tourists, a far more immediately impactful step would be to reduce VAT for our domestic customers. Our VAT rate is the highest among modern economies, so if we want a globally competitive market, we need lower VAT and an equitable alternative to business rates. Without such measures – which would help to keep prices down for customers – thousands of businesses and many more jobs will be lost.
“Confirmation of the energy and NIC proposals will allow our businesses to better plan for survival. Indeed, today’s announcement includes a number of positive measures which will bear fruit in due course, but more is urgently needed to help struggling businesses survive through the winter. There’s a clear shortfall between the positive tax plans and the lack of needed immediate business support.”
Tinker round the edges
Hospitality Ulster chief executive Colin Neill added: “The measures announced by the chancellor might be welcome for some but only tinker around the edges of the support really required by hospitality businesses here.
“Major financial assistance to cut the pressures cause by the high rate of VAT and a business rates holidays are urgently required. Again, it was extremely disappointing that the chancellor did not see fit to make these critical changes in his statement today.
“Measures including the cancellation of the increase in corporation tax and alcohol duty are fine in theory, however, any impact of these are dependent on trade levels and profitability, which is sadly lacking. Further support measures will be required to properly stave off the burdens placed on the industry.”
British Institute of Innkeeping (BII) chief executive said via Twitter: “While the chancellor has recognised the importance of removing barriers to growth including business regulation, the measures announced do not address the vulnerability of our small pub businesses in every community.”
Kwarteng did announce a cancellation of duty hikes on beer, cider, wine and spirits and an extension to draught relief to cover smaller kegs of 20 litres and above, “to help smaller breweries”.
In reaction, the Society of Independent Brewers (SIBA) tweeted: “Great to see the Chancellor supporting small brewers today in his mini budget.”
Business rates
Business rates consultant Colliers said the Government’s failure to act on business rates is disappointing for the high street.
The group said if the Government wants to simplify the tax system, it will remove any planned implementation of phased downwards transition in the next revaluation otherwise this will stifle recovery in the high street and hinder any ‘levelling-up’ agenda.
John Webber, head of business rates at Colliers, said: “It’s disappointing that while today’s ‘tax cutting’ mini budget addressed issues such as income tax, corporation tax, NI and stamp duty, the “elephant in the room”, business rates was largely ignored despite the impact that ultra-high rates bills have had on businesses in recent years.
“Business rates is one of the highest outgoings for occupiers of property. The tax raises around £32bn a year gross (£26bn net) and with rates rising in line with CPI inflation levels for September, predicted to be around 10%, this could potentially add a further £3 billion to the tax bill if nothing is done.
“With just six months to go before the next revaluation, businesses still have no idea what their rateable values will be, what the multiplier will be nor how the government will response to its summer consultation on transitional relief. With no clarity about how much they will be expected to pay in their rates bills come April, how can businesses be expected to plan sensibly ahead?”
Furthermore, the British Institute of Innkeeping (BII) boss Steve Alton said the announcement didn't address its members vulnerability however, he was optimistic of the impact of the move on consumers.
He added: "The energy price guarantee, while welcome, will see most pubs at least doubling their energy costs from last year in addition to the inflationary pressures on their costs of doing business.
"We are hopeful a number of [the chancellor's] measures will support consumer confidence and maintain demand at this now critical period of trading.
"His recognition of too many barriers to enterprise must now also translate into radically reduced regulation in the ongoing disproportionately high business rates our members pay."
Alton highlighted the trade body will continue to engage and make the case to the Government as it conducts its review into vulnerable sectors and warned that without further support, many pubs will fail.