For some, the measures set out by Chancellor Jeremy Hunt in Parliament on Wednesday 22 were “welcome”, while others shared their “devastation” at the lack of a reduction to VAT and a need for business rates discounts to be made “permanent”.
The Chancellor announced alcohol duty would remain frozen until 1 August next year and the 75% business rates discount scheme would also be extended for a further 12-months alongside a reduction to National Insurance contributions.
However, Hunt detailed while the small business rates multiplier would remain frozen, the standard multiplier would increase in line with inflation as well as an increase to the National Living Wage, which industry leaders voiced concerns over following the announcement.
In addition, some operators shared their fear continuously rising costs across the board would counteract the support announced.
Owner of the Unruly Pig in Bromeswell, Suffolk, Brendan Padfield told The Morning Advertiser a VAT cut would have been “radical” to hospitality firms, adding the sector “deserved better”.
He said: “The positives in this statement will barely touch the sides and will not change the rate of attritional insolvencies in the hospitality sector.
Trying to survive
“As the third largest employer by sector, hospitality deserved more help in these unrivalled and uniquely difficult times.
“Public sector spending and Government borrowing are at an all-time high and therefore, objectively, I question whether a VAT cut for hospitality was ever a realistic prospect, however badly it is really needed.
“The most alarming thing is the pressures of the public sector next year, when there will likely be a new Government, will not reduce.”
However, the operator praised the tax relief extension for investment into capital projects announced as part of the Statement, adding it will help those who have had to make “substantial investments in equipment”.
Though he added most pubs were “focused on trying to survive” rather than investing in capital projects.
“Cutting national insurance for many is, at first glance, a welcome development for our hard working and hard-pressed team members, as well as increasing the National Minimum Wage for the fifth year in succession.
“But who is going to pay for all of this? Margins have already been cut to the bone, so this will inevitably mean yet further price increases in what is an already depressed market.
“There’s no scope for us to simply absorb yet another significant increase in cost. It’s a double whammy for employers as the national minimum wage increase means pubs will also then be paying even more employers’ national insurance contributions”, he continued.
“A VAT reduction is the most vital help hospitality needs right now. The freeze on alcohol duty and business rates relief extension is far too little and simply not good enough.”
Echoing Padfield, Cheshire Cat Pub Company owner Tim Bird, said the business rates discount extension was “very welcome” and would be a “huge help” in helping pubs pay for increased rising costs across the board, notably energy prices and “inflated” lager costs.
However, the multiple operator “questioned” the percentage increases for the “inevitable” national minimum wage increase.
The Chancellor announced an increase of 9.8% for workers aged 21 and over, 14.8% for those between 18 and 20 years old and 21.2% for 16–17-year-olds.
“Why not apply 10% increase at all levels of age? [I am] not sure who in the Government did the maths here”, Bird said.
In addition, Bird described the duty freeze as “great news”, but claimed pubs would “suffer” come August next year.
He added: “Let’s hope the big brewers see sense and refrain from putting their prices up for pubs.”
For chef patron and owner of the Parkers Arms in Lancashire, Stosie Madi, the lack of action of VAT in statement was “devastating” and showed pleas from the sector had “fallen on deaf ears yet again”.
Growth economy
She said: “This does not bode well with yet more rising costs in the form of wages.
“A VAT reduction is the most vital help hospitality needs right now. The freeze on alcohol duty and business rates relief extension is far too little and simply not good enough.”
Others across the sector welcomed the support announced for hospitality firms, but warned it needed to be made permanent to allow for growth.
However, during the statement, Hunt stated “temporary support measures could not continue forever”.
Owner of the Onslow Arms in Loxwood, West Sussex, Rob Barr told The Morning Advertiser: “Whilst inflation is now what the Government have targeted, this doesn’t mean prices have gone down, but rather just not increasing as fast as the last 12-18 months.
“The reduction of 75% in business rates, drop of VAT for the hospitality, leisure and tourism industry to 12.5%, should all be permanent.
“This will allow for growth as it will allow for reinvestment in our people and businesses plus businesses can support the Government's ambition of being a high wage, high growth economy.”
