Autumn Statement: Hospitality industry positive despite no VAT cut

05 December 2013 by
Autumn Statement: Hospitality industry positive despite no VAT cut

The UK hospitality industry has cautiously welcomed Chancellor George Osborne's Autumn Statement, which he announced to Parliament earlier today.

Key bodies including the British Hospitality Association (BHA) and the Beer and Pub Association received the statement positively, although the head of hospitality and leisure at business advisor Tods Murray has called the measures a "mixed bag" for the industry, and the Tourism Industry Campaign called the lack of Tourist VAT "a missed opportunity".

National Insurance for under-21s

BHA chief executive Ufi Ibrahim said: "The abolition of NI contributions for those starting out is welcome news and will surely stimulate job creation in both the hospitality sector and beyond."

Business rates cut
The announcement on business rates has been especially seized upon by commentators, which "will result in a total cost saving of around £1bn to businesses over the next 12 months", according to Deloitte head of business rates James Thompson.

The Beer and Pub Association particularly welcome this move, saying it would "avoid a massive £27m bill for thousands of pubs across the country".

BBPA chief executive Brigid Simmonds called the decision "very positive". She said: "The Chancellor was right to champion pubs in his speech. We welcome the Chancellor's decision to extend Small Business Rate Relief which was one of the first objectives of the Better Rates for Pubs campaign. It shows real support from the Government for pubs, and that BBPA calls are being heeded."

School food
There were also positive noises from the Children's Food Trust, who welcomed the news that £150m will be set aside to help schools with kitchens and dining room facilities, ahead of the existing plans to give all primary school children free school meals come 2014.

Chief executive of the Children's Food Trust Linda Cregan, said: "If we want more children eating in our canteens, schools have got to have the kitchens, equipment [and] dining room space. Some schools are already in a good position…but for others, capital funding for new facilities or refurbishment is going to be absolutely essential."

She added: "We look forward to seeing how this funding will be allocated - making sure it gets to the schools that most need it, and that it's used in the most effective way."

VAT and wine and spirit taxes

Tods Murray head of hospitality and leisure Katie Corrigan called the measures "a mixed bag", reminding the industry that some of the measures only apply to England. She also said that the statement had failed to properly address wine and spirit taxes, and had not reduced the VAT on food supplied by hospitality firms.

She said: "Disappointingly, there was no reduction in the alcohol duty escalator on wines and spirits following the abolition of it for beer in the Budget earlier this year. Additionally, there was no mention of reducing VAT on food…despite the VAT campaign and Tax Parity Day earlier in the year. Both would be of great benefit to the sector."

Similarly, the Cut Tourism VAT Campaign called the Chancellor's lack of reduction in tourism VAT "a missed opportunity" and said the continued VAT level would make it "harder for the UK to compete".

The UK Chancellor George Osborne today relayed his Autumn Statement to the House of Commons, ahead of the yearly Budget set to take place on 19 March 2014.

As well as those mentioned, other key statements included the confirmation that there had been no double-dip recession, that employment is at an all-time high and growing, and that three jobs are created in the private sector for every one lost in the public sector.

The Chancellor also set out that train fare rises will be limited to inflation, that forecasts suggest there will be no deficit come 2018/19, that the personal income allowance will be £10,000 from April 2014, and announced a crackdown on tax avoidance set to bring in £9b over the next five years.

The Autumn Statement: Key messages for the hospitality industry

•Abolition of National Insurance contributions for under-21s
•2% cap on business rates for 2014-15
•Business rates discount of up to £1,000 in 2014-15 and 2015-16 for retail properties with a rateable value of up to £50,000
•Business rate relief for small businesses will be extended to April 2015
•Consultation promised on making it easier to change sites from retail into restaurants
•£150m to be set aside to help schools with kitchen and dining room facilities
•Previously-anticipated fuel duty rise for next year cancelled
•There are three jobs created in the private sector for every one lost in the public sector

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