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Budget 2016: reaction from the hospitality industry

16 March 2016 by
Budget 2016: reaction from the hospitality industry

Following on from Chancellor George Osborne's presentation of his Budget in the House of Commons earlier today, the hospitality industry has scrambled to offer its thoughts on what it all means for the sector.

And while many have welcomed some of the measures contained within it, early reaction to the Budget was mixed.

Rob Payne, CEO of Best Western Great Britain said: "It was disappointing to see support for small businesses with rate relief but for that not to be extended to medium-sized business such as the 265 independent hotels I represent. We were looking to the Budget to provide relief from the price pressures we are facing such as National Living Wage but it was not forthcoming."

Paul Connelly, managing director at purchasing company Beacon, branded the Budget disappointing and potentially damaging to the hospitality sector.

"The chancellor doesn't seem to hear what hospitality bodies and businesses are telling him, the concerns we raise and solutions we provide. My fear now is that 2016 could be the year that the industry is forced to change for good but not for the better," he said.

"We are already seeing price increases from suppliers in order to offset the impact of the National Living Wage coming into effect next month, as well as the anticipated increase to £9 per hour by 2020. Add to this the uncertainty around the Drink Drive Legislation that could be introduced in England in the near future, as well as the current rate of tourism VAT in Britain, and the scale of the challenges the industry is facing becomes clear. We are certain that these government changes affect our industry disproportionately, but this isn't reflected in the amount of government support the industry receives. We welcome the business tax relief, which will alleviate some pressure, but it is not enough. Similarly, a token freeze in duty is simply not sufficient to support the hospitality industry."

British Beer and Pub Association (BBPA) chief executive Brigid Simmonds was more welcoming in her assessment, particularly when it came to the freeze in beer duty.

"This freeze means that beer duty is now 17% lower than it would have been, had the chancellor stuck with the escalator policy," she said.

"To achieve three cuts and a freeze from the Chancellor over four Budgets shows a real commitment and concern for both brewing, an important manufacturing industry, and our nation's pubs. Beer is already 20p cheaper in pubs than it would have been under the escalator and the industry has the confidence to invest.

But she noted: "However, we are still paying the second highest beer tax in the whole of Europe. Pubs are facing rises in costs in the coming months, from the living wage, the apprenticeship levy and auto enrolment pensions. The government has more to do to support pubs but it's great to see it acknowledge how vital they are to their local communities."

There was also a positive reaction from property adviser Christie & Co as far as the pub, restaurant and childcare sectors were concerned.

Neil Morgan, Christie & Co's managing director, pubs & restaurants, said: "The cut in commercial property stamp duty is a tremendous boost to the sector. Our clients will be saving money from tomorrow, with a purchser saving £5,000 on a pub worth £270,000.

"Tax savings for lower paid workers will leave them with more of a discretionary spend. This may give a boost to the leisure and licensed sectors."

Simon Chaplin, head of licensed - London at Christie & Co, said: "Doubling the threshold for business rate payers from £6,000 to £15,000 will be a significant saving for independent restaurant, bar and café operators. The freeze in beer and cider duty will of course have a positive impact on both the pub and restaurant sectors, although consumers, and as a result, operators will feel the effect of the planned rise in wine and spirits.

"The cut in business rates will also help cover the increase in National Living Wage for many of our clients."

The Association of Licensed Multiple Retailers (ALMR) welcomed steps to reduce business rates burdens for businesses, but called for more decisive and meaningful action to reduce burdens for licensed hospitality.

The ALMR has also sounded a note of caution on the introduction of a tax on sugary drinks and has warned that costs for retailers may increase as a result.

ALMR chief executive Kate Nicholls said: "The Chancellor has made some positive moves towards supporting businesses, and we welcome measures to reduce business rates burdens, but there is a risk that costs will continue to rise for employers.

"We need confirmation that the tax on sugary drinks will be a true levy on producers and not a sales tax that will increase costs for retailers. The Chancellor has indicated that there will be a consultation on its introduction and the ALMR will be looking to liaise with the Government to ensure that additional costs are not passed on to pubs and bars.

"Extension of Small Business Rate relief is a welcome first step in reducing rates burdens for businesses, but more needs to be done to address a system that currently sees pubs and bars paying 15 pence per pint in rates compared to about 1 penny per pint in supermarkets."

Decisive reform still needed to address costs

The Sustainable Restaurant Association (SRA) welcomed the Chancellor's announcement that he is to introduce a sugar tax on soft drinks in 2018.

Mark Linehan, managing director of the SRA, said: "When you hear statistics like five-year-olds consuming their own body weight in sugar every year, it's impossible not to wholeheartedly support the introduction of a tax on soft drinks.

"The retail sector is undoubtedly where the biggest opportunity lies but the foodservice, restaurant and hospitality sector does have a significant role to play, and Jamie Oliver's very public position and campaign shows the power of our sector to influence opinion and behaviour."

Martin Couchman OBE deputy chief executive, British Hospitality Association (BHA) said: "The BHA is pleased to see the abolition of the Carbon Reduction Commitment energy efficiency scheme which was very bureaucratic and cumbersome and caused difficulties for franchise arrangements.

"Devolved powers to regions to improve transport and connectivity will support job creation and local tourism. We are pleased that English counties and regions will get elected mayors. Tourism should be a top priority for these mayors especially in coastal and rural areas.

"We were also pleased to see the support for tourism and cultural activity with the announcement of cathedral investment, tax breaks for museums and travelling exhibitions.

"We were disappointed not to see a reduction in National Insurance and a delay in the introduction of the Apprenticeship Levy which would have been helpful in reducing the total impact of the National Minimum Wage and the introduction of National Living Wage in April this year.

"Small businesses will be pleased to see the business rates reductions."

Alex Littner, managing director at Boost Capital, said: "Despite calling this ‘a Budget that backs small business', it's disappointing the Government scarcely addressed small companies' on-going need for finance. In particular, there was no mention of the bank referral scheme - a project that was announced in the Budget two years ago, but has yet to be given a date for launch - while many SMEs continue to be rejected for conventional bank funding. Their need is real and urgent. If properly administered, this scheme could introduce ambitious, but currently under-funded small firms to alternative providers with both the resources and appetite to lend.

"Measures to reduce business taxation, abolish business rates for many firms, help online traders, and improve the UK's infrastructure will all be welcomed by small business bosses. The £1 billion package to support SMEs via the British Business Bank is also positive. But without a concerted effort to give firms broader access to business capital, many smaller enterprises will struggle to function at all. Action must be taken now to boost lending to this hard-working community, which is itself so important to Britain's future prosperity."

Commenting on the Budget, Kevin Georgel, chief executive of Admiral Taverns said: "Today's announcements from the Chancellor to freeze beer duty and make meaningful changes to the Business Rates system are very welcome.

"The cost burden on the thousands of small, independently operated pubs across the UK has been too high for too long. Our industry creates jobs and is vital to local economies as well as to the communities which they serve. Whilst these changes are welcome as a move in the right direction, we would urge the Chancellor to continue to ensure that the tax burden on pubs is further reduced in order to create a level playing field and make sure that our Great British Pubs can compete and prosper."

John Vincent, founder of LEON restaurants and sugar campaigners said: "All credit to George Osborne for having the vision to introduce a levy on sugary drinks in the Budget. The voluntary sugar tax that Jamie Oliver and Leon introduced in September 2015 showed what could be done. What is so good is that the money raised will be spent directly on things that will help make children healthier."

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