Budget reaction: Rising costs ‘latest blow’ to sector’s recovery
Now the reduced level of 40% is another cost that businesses have to deal with and for those small- and medium-sized operators, their rates bills will still go up in April
The hospitality industry has criticised chancellor, Rachel Reeves’ first budget, with UKHospitality claiming it is the “latest blow” to the sector’s recovery.
Yesterday, Reeves announced a series of measures aimed at raising £40bn in taxes, including employers’ national insurance contributions rising to 15%, alongside hikes in both the National Living Wage and National Minimum Wage.
She also confirmed the continuation of the business rates relief from April 2025 for hospitality venues, but at a lower rate of 40% instead of the current 75%.
While Kate Nicholls, chief executive of UKHospitality, welcomed the extension, adding that avoiding the business rates “cliff-edge next April was critical and it was important that some relief has been extended,” overall she said that rising taxes, increasing costs and fragile consumer confidence risk bringing growth to a “grinding halt”.
She added: “All of this means that 2025 will be painful for hospitality, with an increased annual tax bill of £3bn for the sector.”
Reacting to the rise in pay and rise in NI, Nick Summers, MD of the Nationwide Caterers Association (NCASS), agreed that while the measures put in place to support employees and employment allowance are “positive”, there had been no tax reform and business rates relief has decreased by 35% which could “further damage any recovery for [the] industry”.
Meanwhile, one decision that was welcomed was the 1.7% cut on draught alcohol drinks duty. Emma McClarkin, CEO of the British Beer and Pub Association (BBPA), said: “The chancellor clearly recognised the sector with some business rate relief – albeit at a lower percentage – and a cut to draught beer duty, but it is hard to see how this Budget will unlock growth and the critical investment needed to deliver it.”
She noted it comes amid the cumulative impact of a “£500m increase to the cost of doing business” for the industry “putting pubs, brewers, investment and jobs at continued risk”.
McClarkin concluded: “We urge the government to fast forward delivery of the details on the positive news on permanent business rate reforms to give our sector the best chance of continuing to serve their communities and regenerate our high streets. Only then will there be the headroom for future investment and growth.
“The government can do more to comprehensively back our sector that is so vital to the lifeblood of our communities economically and socially. We stand ready to help the government deliver faster the full support that’s needed for businesses to thrive.”
