Chancellor sets out plans on apprenticeships, business rates and school meals
The chancellor George Osborne has set out his plans for apprenticeships, business rates, and school meals in his latest Autumn Statement.
Speaking in the House of Commons this afternoon, Osborne declared that the Government would put security - both economic and national security - first.
He also set out the latest predictions for Britain's economic growth, from the Office for Budget Responsibility (OBR), with growth of 2.4% expected in 2015, 2.4% in 2016 and 2.5% in 2017. Growth is then expected to drop slightly to 2.4% in 2018, and 2.3% in 2019 and 2020.
Osborne said that with robust economic growth forecast every year, he expected living standards to rise and an extra one million jobs to be created over the next five years.
"Our economic plan puts the security of working people first so we are prepared for the inevitable storms that lie ahead," he said.
Business rates
Among the measures announced today relevant to the hospitality sector, was the confirmation of plans that local councils would be "given the tools to drive business growth in their area", with uniform business rates being abolished. Local government will be allowed to keep the business rates raised (from 2020) and elected mayors will be able to raise rates, provided they are used to fund specific infrastructure projects approved by local businesses.
Osborne also confirmed that he would extend the Small Business Rate Relief scheme for another year, to help small businesses with the cost of rates. An overall review of business rates is expected to report in the next Budget, due in 2016.
Apprenticeships
Osborne also said that he wanted to see three million apprenticeships created by 2020, an aim announced in his last Budget.
An apprenticeship levy to help pay for the new apprenticeships will come into effect in April 2017, at a rate of 0.5% of an employer's pay bill. A £15,000 allowance for employers means that the levy will only be paid on employers' pay bills over £3m, which is expected to see less than 2% of UK employers paying the levy.
Universal Infant Free School Meals
Osborne confirmed funding will continue for free school meals for all infants.
In his Spending Review and Autumn Statement he said: "Funding for universal infant free school meals will be maintained, supporting healthy eating and saving families around £400 for every infant each year."
The news has already been welcomed by the Lead Association for Catering in Education (LACA), who tweeted: "Great news that @George_Osborne and @hmtreasury have committed to keeping funding for #UIFSM."
Digital Tax System
Osborne said £1.3b will be invested to transform Her Majesty's Revenue and Customs (HMRC) into one of the most digitally advanced tax administrations in the world, with access to digital tax accounts for all small businesses and individuals by 2016-17.
He said: "These reforms will deliver the biggest transformation of the tax system in a generation, making it more effective, efficient and easier for taxpayers and are a first step by HMRC towards meeting a new target to reduce the costs to business of tax administration by £400 million by the end of 2019-20."
Reaction
Reacting to the measures in today's Autumn Statement, the Association of Licensed Multiple Retailers (ALMR), welcomed the news about the extension of business rate relief but said the Government needed to deliver on business rate reform.
ALMR chief executive Kate Nicholls said: "The extension of the small business rate relief for another year is certainly welcome as this is something the ALMR has consistently pushed for. It is disappointing, however, to see that once again we are in a position of urging the Government to hasten with real and meaningful change to the business rates system and to bring about root and branch reform.
"This is increasingly a system that sees business relying on multiple discounts and allowances and is a recipe for confusion or avoidance, something the Treasury has already highlighted. The licensed hospitality sector is carrying an enormous burden in the shape of business rates, with pubs accounting for 2.8% of all UK tax receipts; a situation that is plainly unfair and unsustainable for some businesses. The chancellor indicated that the review of business rates will report at next year's Budget Statement and we are hopeful that it will bring with it good news for the sector.
On the apprenticeship levy, she added: "We are also concerned that the forthcoming apprenticeship levy will place further costs burdens on businesses already facing shrinking margins. The ALMR's Benchmarking Report shows that in labour intensive businesses such as pubs and bars, payroll costs often account for over half of all operating costs and almost one-third of turnover. This extra tax is may well have the effect of distorting payroll costs even further and is likely to undermine in-work investment and training in staff."
Nicholls' comments on the apprenticeship levy echoed the initial thoughts of Peter Davies, employment tax director at WMT. Speaking about the apprenticeship levy on social network Twitter, he said it was "piling more costs onto employers, ok only large ones, but it seems like more bad news for sector with Living Wage and auto enrolment too."
Martin Couchman OBE, deputy chief executive of the British Hospitality Association, said: "We are pleased that 98% of businesses will not be paying the apprenticeship levy because of the £15,000 payroll threshold announced in the Autumn Statement.
"We await details of how smaller businesses will be supported in training apprentices. We are pleased to see that a new employer led body will set apprenticeship standards and ensure quality, but note that the hospitality industry has already made a lot of progress in developing apprenticeship standards."
He also welcomed the decision to delay increases in auto enrolment pension contributions. "The introduction of the National Living Wage (NLW) from April 2016 will have a major impact on hospitality businesses' finances so we are pleased to see a slight softening of costs through the decision to delay increases in auto enrolment pension contributions by 6 months from autumn 2017 and again in autumn 2018."
British Beer and Pub Association (BBPA) chief executive Brigid Simmonds said: "The extension of Small Business Rate Relief for another year is welcome, and is worth £25 million, and is something we had specifically requested. One third of pubs will qualify, 15,000 premises, in total.
"Retail relief was providing a discount for pubs with a rateable value of £50k or less, which is 75 per cent of all pubs. This is a particular problem in the run-up to the revaluation in 2017 as rates bills have become out of kilter with the value of individual businesses.
"Britain's pubs face a total tax bill of £7.3 billion per year, so we will be keeping up the pressure for further measures, such as more action on both beer duty and business rates, as we move towards the Budget in March.
"I do welcome the announcement that small businesses like pubs will typically not be burdened with the Apprenticeship Levy, as this would have placed an excessive burden on what are mostly small businesses. It is crucial that the Levy system is straightforward and allows those that pay into the Levy fund to access their full contribution to support apprenticeships.
"I also welcome the £40 million for Visit England to fund product development, given the vital role that pubs play in the wider tourism industry."
Meanwhile, chartered surveying firm Gerald Eve warned that pubs and restaurants were facing a 12.4% business rates hike next April, as a result of the chancellor's "refusal" to extend the food and drink rates relief scheme in his Autumn Statement.
The relief scheme is currently worth £1,500 a year for pubs and restaurants, but will now end in March 2016. The average pub/restaurant has a rateable value of £29,500, according to Gerald Eve, leading to a current annual rates bill of £14,543 - reduced to £13,043 as a result of the discount scheme. But with bills next year set to rise to £14,661 in line with RPI, and the Government deciding not to continue the retail relief scheme, the average location will see a rise in its bill of £1,618, or 12.4%.
Jerry Schurder, head of business rates at Gerald Eve, said: "Publicans and restaurateurs will be distraught that this relief has been removed, and it is the smallest and most-vulnerable locations on the most down-at-heel high streets that will be affected the most. For these, the £1,500 could be the difference between the life and death of the business.
"With operators in many locations already being hammered by their rates bills, a 12.4% increase could be catastrophic, further endangering businesses and livelihoods. What this shows is just how excessive and inequitable the current business rates system is.
"The tax rate, known as the Uniform Business Rate, will rise to just shy of 50%. Even at current levels it is a punitive and regressive tax well in excess of comparable local property taxes across the globe, so the very idea it should be increased beggars belief. It is about time the Government started listening to businesses' calls for a fairer, less onerous system.
"We were promised just weeks ago that the results of the Government's review into business rates structure would be concluded by the end of the year, but today it was announced that the report will not be made until the spring budget. This isn't good enough. Pubs and restaurants -especially smaller operators - need reform and clarity as soon as possible over their future business rates liabilities.
"By delaying the announcement in this way, the Government has yet again moved the goalposts. We can only hope that the delay means the calls of businesses will at last be noticed and incorporated into the future structure of the business rates system; sadly, recent experience suggests the nation's under-pressure pubs and restaurants shouldn't hold their breath."
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