Mixed reaction to Spring Budget

The Spring Budget announced by Chancellor Jeremy Hunt is something of a mixed bag for hospitality – perhaps helping to tackle some challenges like high vacancy levels in the mid to longer term, but with the current crises surrounding energy contracts and business rates left unmentioned.

It’s not surprising that some industry leaders are taking a ‘glass half empty’ approach and calling for more top-ups.

UKHospitality Chief Executive Kate Nicholls said: “With hospitality businesses continuing to struggle with vacancies running at 56 per cent higher than pre-pandemic levels, the measures announced today are significant in incentivising people back into work and hopefully alleviating crippling labour shortages.

“The significant reforms to childcare and the measures to help the over 50s re-enter the workforce are both areas on which UKHospitality has been calling for action and we’re pleased the Chancellor has recognised the help it can offer tackling the enormous vacancies in hospitality.

Maintaining current levels of energy support to consumers, freezing fuel duty and inflation reducing will help hard-pressed households and increase disposable income, she pointed out, which should be a huge boost for venues in desperate need of trade.

“This will be particularly needed as the sector is still set to see huge energy price increases when current support ends in April, which unfortunately was not addressed. It remains the case that we need to see urgent action on the market failures identified by Ofgem in its non-domestic review update yesterday. The current timeline of further action by the summer is not good enough.”

UKHospitality will continue to press for urgent action on this, as will the NTIA (Night Time Industries Association), whose chair, Sacha Lord, tweeted: “The big energy firms are crushing hospitality. The Govt rallied around the tech firms this weekend… we need the same support.”

Lord added: “Very disappointing that there is no mention of further support for business energy bills or any sector specific package for hospitality. As support tapers off for business from the end of March, it will create a sinkhole of financial difficulty for operators.”

Sam Martin, CEO of food and business support suppliers Peckwater Brands, said: “To allow hospitality to thrive, businesses required a major overhaul of the business rates system, a shot in the arm to staffing, and increased support with energy costs. The measures laid out for hospitality in the Spring Budget fall short of the level of support that industry leaders have been crying out for over the past year.

“Hospitality can be a driver for the economy and a source of both jobs and tax revenue, but without the right conditions to grow, we will likely see businesses shut down by high business rates, unaffordable tax bills and short staffing.

“Short-term support with energy bills may keep the lights on in the coming months, but without further action, the possibility of a return to pre-pandemic levels appears slim. I only hope more can be done to prop up businesses affected by rising costs, and that people will continue to support pubs, bars and restaurants in their communities.”

The Chancellor unveiled a ‘Brexit Pubs Guarantee’ which will see the duty on draught products in pubs up to 11p lower than the duty in supermarkets from 1 August. Nicholls described this as ‘a good start’ urging the Government to consider rolling out this type of tax cut across the wider drinks market.

There are concerns across the industry that the draught products duty change will leave the general public thinking ‘something has been done’ for hospitality, while the most pressing issues remain. And for those in the wine sector the budget news was gloomy. Changes to alcohol duties will see wine costs rise with inflation, putting perhaps 45p on the price of a bottle at a time when Government is also reforming levies based on a drink’s alcoholic strength.

Miles Beale, chief executive of the Wine & Spirit Trade Association, which represents over 300 companies producing, importing and selling wines and spirits, tweeted it was impossible to square that decision with Government claims about bringing down inflation; supporting consumers through the cost-of-living crisis; or supporting hospitality, “because they are killing supply chain businesses.”