'2025 will be painful for hospitality'

• That brings us to the end of our live blog for today's Budget (Wednesday 30 October).

Here's a recap of what we heard:

Business rates relief slashed but system will be overhauled in 2026​

1p off a draught pint but other dispense formats will see duty rise​

Employer national insurance contributions to rise​

15.30 - 'Hard to see how Budget will unlock growth'

The British Beer & Pub Association (BBPA) also outlined the financial impact of the measures announced in the statement.

Chief executive Emma McClarkin said: "The Chancellor clearly recognised the sector with some business rate relief - albeit at a lower percentage - and a cut to draught beer duty, but it is hard to see how this Budget will unlock growth and the critical investment needed to deliver it.

 “The cumulative impact of today’s announcement means a £500m increase to the cost of doing business for the industry putting pubs, brewers, investment and jobs at continued risk.

“We urge the government to fast forward delivery of the detail on the positive news on permanent business rate reforms to give our sector the best chance of continuing to serve their communities and regenerate our high streets. Only then will there be the headroom for future investment and growth. 

“The Government can do more to comprehensibly back our sector that is so vital to the lifeblood of our communities economically and socially. We stand ready to help the Government deliver faster the full support that’s needed for businesses to thrive.”

14.45 - Budget 'latest blow' for sector

Rising employment costs, the lowering of business rates relief and national insurance contributions rising will mean a 'painful' 2025, one trade body has warned.

UKHospitality (UKH) outlined the impact of the Budget announcement while offering a glimmer of positivity with the mention of a lower level of business rates in the future.

Chief executive Kate Nicholls said: "This Budget is the latest blow for hospitality businesses. Rising taxes, increasing costs and fragile consumer confidence risk bringing growth to a grinding halt.

“In the short-term, the tsunami of employment costs coming in April will ultimately do more to hamper growth than incentivise it. Increases to employer NICs and wages will make it harder for businesses to support employment and invest in their businesses.

“Avoiding the business rates cliff-edge next April was critical and it was important that some relief has been extended. However, the reduced level of 40% is another cost that businesses have to deal with. For those small- and medium-sized operators, their rates bills will still go up in April.

“All of this means that 2025 will be painful for hospitality, with an increased annual tax bill of £3bn for the sector.

“However, there are reasons for longer-term positivity. I am pleased that the Chancellor is implementing UKH’s recommendation for a permanently lower level of business rates for hospitality. Levelling the playing field in this way recognises the importance of the high street and the role it plays in our communities and economy.

“We need to see the detail and the Government must work with the sector in the design and delivery of this significant change to get it right.”

Meanwhile, Diageo GB managing director Nuno Teles voiced disappointment about alcohol duty.

Teles said: “On the campaign trail, Keir Starmer pledged to ‘back the Scotch whisky industry to the hilt’. Instead, the Government has broken this promise and slammed even more duty on spirits. This betrayal will leave a bitter taste for drinkers and pubs while jeopardising jobs and investment across Scotland.”

14.29 - 140% rise in business rates bills​

The reduction in business rates relief from 75% to 40% will mean an average 140% increase in bills for retail, hospitality and leisure firms in England, experts have estimated.

The average business rates bill for pubs will go up from £3,938 to £9,451, according to real estate firm Altus Group.

President of property tax Alex Probyn said: "Despite Labour's manifesto recognition of the undue burden business rates place on our high streets, this Budget actually increases that burden by £688m for those types of businesses for next year in the short term."

Meanwhile, property consultancy Gerald Eve also warned of the implication of today's Budget. The firm's head of business rates Simon Green said: "The decision to slash the retail, hospitality and leisure relief scheme from 75% to 40% is absolute madness. It will see rates bills more than double overnight for 250,000 small businesses, leading to business failures and job losses."

14.02 - NIC and wage rises 'threaten existence of pubs'

The British Institute of Innkeeping (BII) has warned the rise in national insurance contributions and wages from April next year will have a huge impact on pub operators' profitability.

Furthermore, the trade body said the lower business rates relief (a drop from 75% to 40%) will leaving operators facing difficult decisions on whether they will be able to continue trading, referencing its research, which found just one in four businesses are currently profitable. The BII also said the full reform of the business rates system in 2026/27 is welcome but long overdue and not protecting pubs in the mean time. 

Chief executive Steve Alton said: “These are businesses at the heart of their communities, who have invested heavily since the pandemic in their pubs, making them safe, welcoming spaces, open to all. As we head towards the festive period, they will continue to ensure their customers can connect with friends, family and their wider community, but the quieter winter months will be incredibly tough, especially with lower rate relief of 40% on business rates, as well as increased employment costs.

“We will continue to make the case for more support, alongside our members taking their challenges directly to their local MPs. This support needs to be an actual reduction in the unfair level of tax our pubs pay with a priority on a specific VAT reduction for pubs, as well as a full and urgent business rate reform, as a recognition of their vital role in connecting communities, providing local employment and supporting a host of other local businesses.

“Without this investment in their futures, we stand to lose many more of these unique and essential community hubs.”

13.57 - 'Treating all businesses the same no longer sustainable'

Night-time adviser for Greater Manchester Sacha Lord said the Budget puts an "undeniable toll on small businesses".

He added: “While I appreciate growth must be the priority, businesses cannot absorb rising costs with such small margins and still be viable.

“In the past five years, the number of restaurants in the UK has dropped by a fifth and I am extremely concerned this rate of closure will now double in the years ahead as business owners find themselves in unsustainable financial positions.” 

“This Budget has shown that treating all businesses the same is just no longer sustainable. Restaurants, hotels, pubs, and bars operate on an entirely different model than the leisure and retail sectors, yet our businesses are being treated, taxed and regulated in the same manner.

"The high street has changed, and the way we approach budgetary decisions and policies must too. We need targeted support and dedicated representation as a single industry, before we reach a point of no return in the slow devastation of our once proud night culture.”

13.14 - Draught alcohol duty cut pledge​

The Chancellor announces a cut to duty on draught alcohol​, which was received by cheers from the house.

"Which means a penny off the pints at the pubs," she added.

Furthermore, duty rates on non-draught products will rise in line with RPI from February 2025.

13.12 - Business rates relief

Reeves said: "From 2026/27, we intend to introduce two permanently lower tax rates for retail, hospitality and leisure properties, which make up the backbone of our high streets across the country.

"It is our intention that it is paid for by a higher multiplier for the most valuable properties. But the previous Government created a cliff edge next year as temporary reliefs end.

"I will today provide 40% relief on business rates for the retail, hospitality and leisure industry for 2025/26 up to a cap of £110,000 per business. Alongside this, the small business tax multiplier will be frozen next year."

Looks like chancellor has confirmed Business rates reform from 2026 with a permanent lower tax rate for hospitality paid for by higher tax rate on online business premises. That should reduce all bills. However, current reliefs while extended are reduced to 40%

— Kate Nicholls OBE (@UKHospKate) October 30, 2024

Business rates is the area many industry leaders have been lobbying for support on​ as it is set to end in its current guise from April 2025.

See more about the announcement here​.

13.05 - NICs up for employers

The Chancellor revealed employers' national insurance contributions will increase from 13.8% to 15%.

She said: "We will increase the rate of employer's NI contributions increased by 1.2 percentage points to 15% from April 2025 and we will reduce secondary threshold the level at which employers start paying national insurance on each employee's salary from £9,100 a year to £5,000."

"This will raise £25bn per year by the end of the forecast period. I know this is a difficult choice, I do not take this decision lightly. We are asking businesses to contribute more and I know there will be impacts of this measure felt beyond businesses too."

12.57 - Wage rises confirmed

Reeves confirms the national living wage (NLW) will be rising by 6.7% and national minimum wage will increase to £10 from £8.60. She also confirmed the Government is working towards creating a single wage rate.

She said: "We will accept the Low Pay Commission's recommendation to increase NLW by 6.7% to £12.21 an hour, worth up to £1,400 a year for a full time worker."

This was first announced last night. See more here​.

12.30 – Budget set to begin

Chancellor Rachel Reeves steps up to deliver the Budget – the first to be delivered by Labour in 14 years.

09.30 – BBPA's warning

The British Beer & Pub Association (BBPA) has warned workers will be the ones who pay the price of cost hikes.

BBPA warns if brewers and pubs face hike in costs, workers will be the ones inevitably pay the price ⬇️ pic.twitter.com/qdbNZJj10f

— British Beer & Pub Association (@beerandpub) October 30, 2024

08.00 ​– ​Wednesday 30 October 2024 – Sector gears up for Budget announcement​

Hello and welcome to The Morning Advertiser​’s live blog where we’ll be reporting the goings on before, during and after the Budget is delivered.

Just yesterday (Tuesday 29 October), it was revealed the national living wage (NLW) will rise by 6.7%​ to £12.21 an hour from April next year.

Chancellor Rachel Reeves is set to announce in the Budget that NLW will increase from £11.44 to £12.21 an hour.

The national minimum wage (NMW) for 18 to 20-year-olds will also rise from £8.60 to £10 an hour – up 16% and the largest increase on record.

UKHospitality chief executive Kate Nicholls stated the hikes were "well above expectations", making the Budget "even more important".

The Night-Time Industries Association said the rise was a "breaking point" for nightlife and hospitality businesses that were already being stretched thin.

Furthermore, night-time economy adviser for Greater Manchester Sacha Lord warned high streets would be “decimated” without support​ for the hospitality sector.

Research from trade bodies UKH, the British Institute of Innkeeping (BII) and the British Beer & Pub Association (BBPA) revealed more than half (54%) of firms would reduce their employment levels​, risking job losses if the current business rates relief ends next year.

Furthermore, 51% would cancel planned investment and more than a quarter (28%) would have to close at least one site.

Recently, UKH spearheaded a letter, which was signed by 170 business leaders​​, that outlined the sector would face an additional £914m in rates bills should the current relief end as planned on 31 March.

It warned should this happen, investment would be curtailed, employment opportunities squandered and there will be higher levels of business failure.

Stonegate boss David McDowall also added his voice to the calls for business rates relief​, telling the BBC’s Today ​programme that thousands of licensees were currently only making around 12p of profit from every pint sold.

In the lead-up to the general election earlier this year, Labour’s manifesto outlined its five-point plan​​​ to “revamp” empty and boarded up pubs, including stamping out late payments alongside business rates reformation.