Industry gives Budget two cheers

The hospitality industry gave a lukewarm welcome to last week's Budget, although there was disappointment that the industry's ongoing plea for a cut in the level of VAT on hospitality and tourism services was once again ignored.

Groupe Chez Gérard's deputy chairman Laurence Isaacson said that the reduction in corporation tax would help business marginally, as the reduction in income tax would benefit staff.

However, he disagreed with the British Hospitality Association (BHA), which considered this would boost consumer spending in the industry. "It won't affect consumer expenditure at all in our restaurants," he said.

There was also relief at the freeze on alcohol duty, although Camra, the Campaign for Real Ale, condemned the Budget for failing to reduce beer tax for the UK's 300 small breweries.

There was continued disappointment from the BHA that Chancellor Gordon Brown had again failed to address the 17.5% VAT level on tourism and hospitality services.

A report by Deloitte & Touche last year showed that growth in tourism revenues has fallen as VAT rates have increased.

The report argued that the UK's second highest VAT rate in Europe clearly put hospitality businesses at a disadvantage to its European counterparts. "We will continue to argue our case," said BHA chief executive Jeremy Logie.