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Budget: ‘Cheers, but we need more’

UKHospitality’s chief executive Kate Nicholls has raised a glass to several elements of Chancellor Rishi Sunak’s Budget, but warned the industry is still very fragile and facing a ‘toxic cocktail’.

Kate Nicholls, UKHospitality

She said: “We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the Chancellor’s move today to extend the 50 per cent business rates relief for the hospitality and leisure sector for the next financial year. The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.”

Simplifying and in many cases reducing alcohol duties was great news for pubs, bars and restaurants, and will benefit all: “The Chancellor has shown real innovation and creativity in reforming an archaic system of duty, which we applaud.”

The alcohol duties system is to be cut from 15 rates to six, mostly based on higher tax rates levels based on alcohol levels in the beverage. Draught beer and cider rates are to cut by five per cent and planned increase of duty on spirits such as whiskey has been cancelled.

However, hospitality remains incredibly fragile, facing myriad critical issues including rising utility bills, wage bills and food and drink prices, resulting in 13 per cent inflationary costs that businesses are having to absorb at the same time as they navigate severe supply chain issues and chronic staff shortages. “Given this toxic cocktail, it is imperative the Government go further to support businesses in our sector,” said Nicholls.

“The most effective way to achieve this would be to maintain the current lower 12.5 per cent of VAT for the sector. The Chancellor has been bold and radical with alcohol duty – we urge him to adopt the same approach when implementing root and branch reform of business rates, to ensure industries share the burden equally.

“Hospitality has shown this summer that it has the potential to kickstart the nation’s recovery and deliver jobs, growth and investment at pace across all parts of the country but that could grind to a halt next year. It can only lead recovery with the right measures of support in place.”

The discount on business rates for the hospitality, retail and leisure sectors is up to £110,000 and was announced by the Chancellor as the biggest single-year rates cut for firms in over 30 years. From 2023 revaluations of rates will be made every three years as the business rates system is reformed.

Other budget measures like to affect our industry include that from 2023 companies can make property improvements without having to pay additional business rates for a year. Sunak also confirmed that the national minimum wage will rise to £9.50 an hour from April next year.

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