Viewpoint: This cut-and-paste Budget isn't even a sticking plaster for hospitality

21 March 2024 by
Viewpoint: This cut-and-paste Budget isn't even a sticking plaster for hospitality

The chancellor could have used the Spring Budget to give the hospitality industry a better chance of survival, but instead he may have condemned even more companies to closure, says Kate Nicholls

It was, as far as the hospitality sector is concerned, an utterly unhelpful budget.

Nothing that the thousands of operators, their businesses and teams had hoped would help ease the load came to pass, as the chancellor passed up a huge opportunity to prove his support for our vitally important sector.

We were all eagerly anticipating Budget measures acknowledging the serious problems still being endured across the whole of hospitality, but they failed to materialise. Jeremy Hunt missed his cue to accelerate this industry's journey back to growth and profit, sidestepping a chance to back it as the sector best placed to lead the recovery of the wider UK economy.

So, instead of a Budget to inspire and further galvanise hospitality, he delivered a cut-and-paste Budget, one which simply maintains the status quo and acts as a drag on the financial upturn we're all desperate for.

It all leaves us still waiting to see what sort of long-term effect January's National Insurance cut will have. Will it give consumer confidence a much-needed shot in the arm, in turn generating growth? It's too early to tell, but we hope that cut, combined with another in April, will deliver on both fronts. However, stimulating a consumer demand already under pressure from so many fronts is just one piece of the jigsaw; the other is helping business, and sadly the Budget contained very little that will make a significant difference.

Time then for the government to adopt a different approach. It must bear down on the seemingly unending rising costs that are forcing hundreds of businesses to shut their doors for good. Of course, those closures also mean job losses and, for many towns and villages, the loss of vital community assets.

April's business rates hike and increases to both the National Minimum Wage and National Living Wage will herald bigger bills for operators, in turn contributing to inflation, as venues are forced to pass on these costs to customers.

It wasn't surprising that the whole of hospitality has been united behind our calls for the government to cut the VAT rate for the sector, cap business rate rises and reduce employer wage costs.

A lower rate of VAT – like the 12.5% that was so helpful to thousands of hospitality businesses during the pandemic – would have been a brave and daring reform, helping to drive growth, keep down prices and provide the key to unlock investment in our industry – an industry predicted to grow six times faster than the rest of the economy.

Moreover, when hospitality performs, the rest of UK business performs. Indeed, hospitality has been proven to be a sector that acts as a catalyst for growth across the UK, and a strong platform on which to base the full recovery of what can be considered the everyday economy.

Which makes the chancellor's tame Budget so frustrating, so discouraging and so utterly unhelpful.

Kate Nicholls is chief executive of UKHospitality

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