Chancellor Jeremy Hunt yesterday announced an extension of the 75% business rates relief for retail, hospitality, and leisure businesses for an additional 12 months in the Autumn Statement. The discount, introduced during the pandemic, will continue despite the chancellor cautioning against the perpetual use of temporary support measures. This relief allows businesses to claim up to £110,000, resulting in an annual savings of approximately £12,800 for the average pub.
The National Living Wage is also set to rise by almost 10%, reaching £11.44 from April 1, 2024, with eligibility extended to 21- and 22-year-olds for the first time.
The Autumn Statement also included a 2% cut in employee National Insurance, reducing it from 12% to 10%, resulting in a £450 tax reduction for an employee earning the average salary of £35,000. This cut, effective from January 6, 2024, was fast-tracked. Hunt also abolished Class 2 National Insurance for the self-employed and confirmed the rollout of 30 hours of free childcare for parents of one- and two-year-olds beginning in April.
Hunt acknowledged the vital role of pubs and high street shops in communities, highlighting a £4.3 billion tax cut to support these businesses. Although the small business multiplier remains frozen, the standard business multiplier will increase by 6.4%.
Additionally, Hunt confirmed a freeze on alcohol duty until August 1 next year, preventing an increase in the cost of going to the pub. The UK Spirits Alliance welcomed the decision, expressing gratitude for the chancellor’s responsiveness to the industry’s concerns.
But is any of this enough to support the industry during it’s most challenging time?
Despite industry campaigns, there was no mention of a much-needed reduction in VAT for hospitality in the chancellor’s statement. Calls for VAT-free shopping for overseas visitors were also unaddressed during his speech to the House of Commons. The chancellor emphasized a commitment to decisions for the long term, aiming for reduced debt, lower taxes, and increased rewards for work.
UKHospitality chief executive Kate Nicholls praised the measures but raised concerns about the potential £150 million rates hike for businesses representing almost two-thirds of the sector’s trade. While the increase fulfills a manifesto commitment to eliminate low pay, Nicholls warned of significant knock-on impacts on businesses.
Elite Bistros founder Gary Usher took to Twitter to comment. “The lack of support today from the government means most independent hospitality businesses will have to make redundancies, close services, & source inferior produce. It’s a perfect storm for closures.”
Chef Paul Askew also took to Twitter to give his thoughts on the statement. “Business rates relief is a drop in the ocean compared to the costs Businesses are being asked to pay It shows yet again how out of touch with Independent food led businesses the Government are. It’s a very sad day – cut VAT on food sales – it’s a nonsense.”
Popular Spanish concept Lunya also took to social media to give their own example of how the support measures were not enough to support or sustain the industry. “When we opened in 2010. Our Extra Virgin Olive Oil was £18 for 5L. Next week it rises to £59. A 300% increase. Every other commodity has a similar story. Don’t fear though. Yesterday the government helped our sector with… Sweet FA. And in that time we’ve paid over £10M in tax.”
Speaking to Propel, Loungers founder Alex Reilley said: “Business rates support is a continuation of existing support (and is vital to many). A beer duty freeze is just that, a ‘freeze’, and is worth absolute buttons. The cost of inflation busting NLW is being picked up by business not the government (along with the employers’ national insurance on the increase). At the very least, the chancellor could have cut employers’ NI in line with the cut to employees’ NI to go some way to helping SMEs being able to afford their payroll costs from April ‘24 and stay afloat. All of this on top of being forced to take out covid loans (that are now subject to higher interest rates). There are some fabulously talented hospitality entrepreneurs out there who have put it all on the line, invested their savings and, through hard work and ambition, created brilliant businesses. But really, how are they going to survive? If I was dealing with this 15 years ago when Loungers was an SME, I doubt we’d have made it through. How many businesses that could, in years to come, be creating nearly 1,000 new jobs a year and investing over £30m in new sites (like Loungers is now) will fail?”