The UK’s hospitality industry has been disappointed by the Autumn Budget, with no cuts to VAT and no changes to National Insurance.
Even a cut to business rates has been described as “too little, too little” as well as something likely to get wiped out by an inflation-linked revaluation of rates next year.
“This is a sad day for the nation’s distillers, pubs and the wider hospitality sector,” Karl Mason, UK Spirits Alliance spokesperson and director of Masons of Yorkshire in North Yorkshire, said.
“Three in ten landlords are scared that they will go bust within a year if costs increase; this Budget will push businesses on the brink over the edge,” Mason said.
The UK’s hospitality industry has been hammered in the last year due to tax rises and a lack of consumer confidence; ONS data shows hospitality is set to lose 111,000 jobs by the end of this month.
The industry lobby, UK Hospitality, had called for a cut to VAT, lower National Insurance contributions and lower business rates, with other industry leaders hoping for the same outcome – particularly with regards to VAT.
‘I fear it could be devastating’
Chris Gamm, CEO at Springboard, said that the lower business rates bill for hospitality won’t cover losses from a higher minimum wage and a freeze on income tax and NI thresholds.
“We expect entry-level hospitality roles to decrease and further job losses to follow,” Gamm said.
Pub closures already reached a record high in the first 10 months of the year, the most in more than two decades, according to figures compiled using insolvency disclosures.
That represents a rise of five per cent compared to the same period last year, and a more than tripling compared to 2015
Piers Skinner, managing director of hospitality-tech firm Telemetry, said: “Today’s budget squeezes the hospitality sector even further, with absolutely no relief provided to support.
“I fear it could be devastating.”
Tourist tax adds to woes
Earlier this week, Reeves opened the door for mayors to impose a “modest” charge on visitors staying in hotels, bed and breakfasts, guest houses and holiday lets through the English Devolution and Community Empowerment Bill, which is currently going through Parliament.
The measure, which has been called for by regional leaders including London Mayor Sir Sadiq Khan and Greater Manchester’s Andy Burnham, has been condemned by the hospitality industry.
“The government has gone back on its word and introduced a damaging holiday tax… [it] has blatantly disregarded the commitments it gave to the House of Commons just two months ago that it ‘had no plans’ to introduce this tax,” Kate Nicholls, chair of UKHospitality, said.
“This is a shocking U-turn that will only make life more expensive for working people… It could cost the public up to £518m in additional tax when they travel in the UK and having knock-on impacts for the wider hospitality sector,” she added.
Critics worry that the tax will discourage travel and make life tougher for the already-struggling hospitality industry.
“Make no mistake – this cost will be passed directly onto consumers, drive inflation and undermine the Government’s aim to reduce the cost of living,” Nicholls said.