Spring Budget 'profoundly disappointing' for pubs

The Chancellor Jeremy Hunt held the Spring Budget yesterday (Wednesday 6 March).

He announced alcohol duty would be frozen until February 2025, to “back the Great British pub”.

No announcements were made regarding VAT or business rates.

UKHospitality chief executive Kate Nicholls said the Chancellor missed a real opportunity to show he backs hospitality and understands the real pain operators are enduring.

“He had a chance to accelerate and unlock hospitality, but instead he has delivered a cut-and-paste Budget, maintaining the status quo which continues to act as a drag on recovery,” she said.

She added: “Government needs to take a different approach. It needs to bear down on the never-ending rising costs that are forcing businesses to shut their doors for good – taking away people’s livelihoods and robbing communities of a vital asset.”

Nicholls said introducing a lower rate of VAT, which trade bodies had called for, would have been a “bold reform” that would drive economic growth and keep prices down.

Theakston’s Brewery managing director Richard Bradbury said: “The UK already holds one of the highest excise rates in Europe and against a backdrop of continually rising running costs for pubs, we welcome the duty freeze on alcohol announced in the Chancellor’s Budget.

“From increases to the national minimum wage, rising energy costs and reduced spending due to the cost-of-living crisis, the pressures pubs face continue to mount so it is a comfort to know that at least one cost is held.”

Young’s Pubs chief executive Simon Dodd said the Government has “once again kicked the can down the road rather than implement much-needed long-term support for the hospitality sector”, with operators struggling for survival as they grapple with cost pressures and an “excessive” tax burden.

He said: “While we welcome the extension of the alcohol duty freeze, it is simply not enough to secure the long-term future of our sector and the livelihoods of the millions that work within it.

“To make a real difference, we absolutely need a sensible cut to VAT and reform of business rates.”

This was echoed by Nick Mackenzie, chief executive of Greene King, who also welcomed the freeze, but said it was significantly overweighed by the cost of doing business.

He said it was “disappointing” the Chancellor had not reduced VAT or reformed the rates system.

He added: “We’ve invested heavily in our pubs and our teams, bringing long-term social value to communities across the UK.

“But the sector needs wider regulatory reform if it is to continue to create hundreds of thousands of jobs and support the nation's economic growth.”

The Scottish Licensed Trade Association (SLTA) reiterated its threat of long-term damage to Scotland’s hospitality sector as a result of ongoing government inaction.

SLTA managing director Colin Wilkinson said the Chancellor’s failure to implement a reduction in VAT in his Budget was “extremely disappointing but predictable” and warned: “It’s a torrid time for licensed trade operators across Scotland just now – everyone is struggling with ongoing cost of living issues.”

Chris Jowsey, Admiral Taverns chief executive, said his disappointment lay with the fact Government had not cut draught beer duty for pubs, nor had it addressed a reduction in employer National Insurance contributions, as well as a failure to reform rates.

Jowsey said: “Over the past years our licensees have worked tremendously hard to overcome every obstacle that has been thrown at them and they now face a frightening rise in costs which will likely result in hundreds of pubs closing for good.

“I would urge the Chancellor to immediately reconsider further support to our sector to enable these vital community lifelines to trade out of this economic crisis."

The Campaign for Real Ale (CAMRA) chairman Nik Antona added that the Budget was a “missed opportunity” to show “backing for the Great British pub” through cutting tax of draught beer and cider or cut VAT.

However, he also welcomed the decision to freeze alcohol duty.

Night Time Industries Association chief executive Michael Kill has expressed “profound disappointment”, characterising the Chancellor’s message as “You are on your own”.

Kill said: "The economic challenges faced by our sector are catastrophic, and following today's spring budget announcement, the lack of support will have a profound impact on this sector for years to come.

"For months, the entire sector has been providing the Government with critical information outlining our precarious situation and the urgent need for supportive measures to sustain businesses through these turbulent times.

"In simple terms, it's time for change. We have lost faith in the Government.

“The livelihoods and businesses we represent are not political pawns but vital contributors to community well-being across the UK.

“It is imperative that the Government recognises this and takes decisive steps to support the sector."

On a more positive note. Carlsberg Marston’s Brewing Company chief executive Paul Davies said: “We're pleased to see the Chancellor has listened to the beer and pub industry which has strongly made the case that any increase to duty for our sector and our customers would be hugely damaging.

“Today’s announcement that duty will be frozen until February 2025 will make a tangible difference to hospitality and the brewing sector, as our industry continues to adapt to a challenging operational climate which has seen many pubs sadly closing their doors in recent months.”

On a similar note, a spokesperson for Heineken UK said: “We welcome the freezing of alcohol duties until February 2025. This freeze will help bring out the best in the great British Pub.

“Licensees across the UK now need further help to thrive, in the form of long-term, fundamental reform to the business rates system which despite recent support still sees UK pubs overpaying by £400m.”

Furthermore, St Austell brewery chief executive Kevin Georgel added: “As a brewery, we welcome the Chancellor’s decision to extend the freeze to beer duty in today’s budget, but this will not see costs cut for our sector.

“The UK still has one of the highest levels of beer duty in Europe - 12 times higher than Germany. We would therefore like to see the government set out a roadmap to bring current duty down to the European average.

“Great British pubs are at the heart of their communities, but they remain over-taxed and under increasing pressure due to the impact of inflation, the cost of living, reduced footfall, and high operating costs. This was not addressed in today’s budget.

“We therefore urgently need the long-term reformation of business rates, a VAT cut, and more meaningful government support to reduce the tax burdens on our sector - one of the UK’s leading employers and social and economic contributors.”