Restaurants, pubs, bars and nightclubs could face a tax hike of £213m after next month’s Budget unless the government does more to offer decisive, targeted support to the sector.
That’s the warning from the Association of Licensed Multiple Retailers (ALMR), which has called on the government to safeguard employment and growth in its submission to the autumn Budget, due to be delivered by Chancellor Philip Hammond on 22 November.
The ALMR said the tax hike would come through increases in business rates and excise duty.
It highlighted the UK’s eating and drinking out sector to the wider economy. The sector generates £63b in economic activity and adds £23b to the UK’s GDP. Venues in the sector also directly employ 1.6 million people – around 7% of all private sector employment. The ALMR also claims that pubs, restaurants, bars and nightclubs have created 30% of all net new employment over the past year.
But it said that growth was at risk as a result of increasing cost pressures on businesses, combined with falling consumer and investment confidence and instability caused by Brexit. It called on the government to offer immediate short-term support by:
- Undertaking reform of the business rates system
- A freeze, or at least a cap, in the multiplier for April 2018
- Increasing pub-specific relief to £5,000 per annum and broadening it to include the wider eating and drinking out sector
- Freezing alcohol duty excise rates
- Committing to be led by the Low Pay Commission’s recommendations when determining minimum wage rates.
It also proposed a series of measures to secure the long-term future of the sector by:
- Securing a future immigration policy that recognises the eating and drinking out sector’s workforce
- Working with businesses in the sector to produce a post-Brexit tax and regulatory regime that promotes growth and allows the sector to compete globally
- Outlining its intention with regards to hospitality sector VAT in Northern Ireland and in a post-Brexit environment.
ALMR chief executive Kate Nicholls (pictured) said: “With Brexit on the horizon, this is a hugely important moment for the UK. This could also be a crucial Budget for the eating and drinking out sector. Unquestionably, cost pressures are rising at a time of maximum uncertainty and confusion for employers.
“The eating and drinking out sector is currently doing some fantastic work, revitalising high streets and driving employment and growth; but these businesses are not immune to pressures. The sector is facing a massive £213m tax hike through increases to rates and duty, which will have a considerable impact on investment and growth.
“The government has the power to provide support for vital UK business that will ease pressure, provide stability and help them unlock even greater potential.
“Eating and drinking venues in towns and city centres are fantastic social and communal assets as well as being brilliant employers. They can be one of the most important pillars of the economy as the government looks to grow the UK economy outside of the EU. This can only be achieved if these crucial businesses have the support and opportunities they deserve.
“If the government wishes to lay the foundations for a strong UK economy that will prosper over the coming decades, a great first step would be to act to support those businesses that play a significant role in the fortunes of local economies in every part of the country.”
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