By Denis Sheehan FIH:
If the sheer volume of incoming emails related to today’s budget is anything to go by it must have been one of the most watched by people across our industry.
In recent times the UK economic landscape has been turbulent for most in hospitality, every cost line on every P&L travelling in one direction, up. At the same time footfall and turnover is not going in the same direction as the cost of living crisis continues.
Today’s budget will add significant further cost to operators and here are some of the key components of the budget as published and unedited, followed with feedback from the industry.
Business Rates
“The government will deliver a fairer business rates system through permanently lower business rates multipliers for retail, hospitality and leisure (RHL) properties from 2026-27. The Budget also provides £1.9 billion of support to small businesses and the high street in 2025-26 by freezing the small business multiplier and providing 40% relief on bills for RHL properties, up to a £110,000 cash cap.
“The government intends to introduce permanently lower business rates multipliers for high street retail, hospitality and leisure properties (RHL) from 2026-27. To make sure this tax cut is fiscally sustainable, the government intends to fund it through a higher multiplier for the most valuable properties. This measure will provide certainty and support for the high street.”
National Insurance
“Increase the rate of employer NICs by 1.2 percentage points to 15%. The per-employee threshold at which employers start to pay National Insurance will be reduced from £9,100 per year to £5,000 per year. These changes will apply from 6 April 2025.
“To support small businesses with these changes, the government is increasing the Employment Allowance from £5,000 to £10,500 and removing the £100,000 threshold, expanding this to all eligible employers. This means that 865,000 employers will pay no NICs next year.”
Alcohol Duty
“To recognise the economic and cultural importance of British pubs, and commitment to supporting smaller brewers, the government is cutting alcohol duty on draught products from February next year, reducing it by 1 penny per average strength pint. Alcohol duty on non-draught products will increase in line with Retail Price Index (RPI) inflation from the same date.”
Opinion on the Budget reflects concerns particularly for the short term as all too many operators will find additional costs difficult to absorb. Surviving for many will be the priority, and the chancellor’s cake tomorrow growth forecasts hard to visualise.
An Operators View: Sam Harrison, Sam’s Riverside & Sam’s Larder
“It does feel like this budget is another blow for the hospitality industry and at a time that most of us seeing some of the toughest trading we have ever known. Increasing costs and fragile consumer confidence are very much having an impact. I support the rise in the National Living Wage and firmly believe all colleagues must be paid fairly. But alongside the other increases this budget has the potential to be very damaging for the sector. I think it means that 2025 will be very tough year and especially for smaller hospitality businesses- sadly I think we will see more closures, rather than growth. I have to ask if this government really understands what it takes to open, grow, and build small businesses.”
UKHospitality
Kate Nicholls, Chief Executive of UKHospitality, said: “This Budget is the latest blow for hospitality businesses. Rising taxes, increasing costs and fragile consumer confidence risk bringing growth to a grinding halt.
“In the short-term, the tsunami of employment costs coming in April will ultimately do more to hamper growth than incentivise it. Increases to employer NICs and wages will make it harder for businesses to support employment and invest in their businesses.
“Avoiding the business rates cliff-edge next April was critical and it was important that some relief has been extended. However, the reduced level of 40% is another cost that businesses have to deal with. For those small- and medium-sized operators, their rates bills will still go up in April.
“All of this means that 2025 will be painful for hospitality, with an increased annual tax bill of £3 billion for the sector.
“However, there are reasons for longer-term positivity. I am pleased that the Chancellor is implementing UKHospitality’s recommendation for a permanently lower level of business rates for hospitality. Levelling the playing field in this way recognises the importance of the high street and the role it plays in our communities and economy.
“We need to see the detail and the Government must work with the sector in the design and delivery of this significant change to get it right.”
Nationwide Caterers Association
A statement from Nick Summers, MD of the Nationwide Caterers Association on the Autumn Budget
“Today’s budget is deeply disappointing. It missed the opportunity to provide the support that hospitality and NTE needs and will significantly impact the small and micro independent businesses that make up much of the foundational economy.
“The measures put in place to support employees and employment allowance are positive. However, there has been no tax reform and business rates relief has decreased by 35%. In addition, increases to the National Living Wage, National Minimum Wage and employers National Insurance contributions could further damage any recovery for our industry.
“Independent hospitality has suffered enough – without profit, we are merely tax collectors. Solutions such as hot food tax reform (hot food tax is discriminatory), a sliding scale for VAT and a meaningful VAT threshold increase has been ignored again. The Chancellor must engage with small and micro businesses urgently to avoid further irrecoverable loss. We will continue to lobby government, work with other associations and raise the profile of our members and the wider sector.”
CAMRA
Responding to the Chancellor of the Exchequer’s Budget statement Ash Corbett-Collins, Chairman of CAMRA, the Campaign for Real Ale, said:
Beer and cider duty
“Despite general rises in alcohol duty next year, CAMRA is pleased to see the Chancellor’s decision to cut the rate of tax specifically on beer and cider served in pubs, clubs and taprooms. This will help pub goers as well as independent breweries and cider producers who sell more of their products into pubs and recognises the principle that drinking in the community setting of the local pub is far preferable to the likes of cheap supermarket alcohol.”
Business rates for pubs in England:
“Today’s announcement of a new, lower rate of Business Rates for retail, hospitality and leisure businesses could be a gamechanger for pubs in England. If this is done right and we get a fairer rates regime which ends the system where our pubs are penalised with unfair bills, this would help save community locals up and down the country.
“Until a new, fairer system is in force in 2026/27, we are pleased to see that discounts on business rates bills for pubs will be extended into the next financial year, albeit a lower 40%. However, the Treasury should monitor the impact that this reduction in support is having on struggling community pubs to make sure more businesses aren’t forced to close their doors for good.”
On the Government review on access to market for independent breweries
“Consumers are looking forward to hearing more about the previously announced policy on helping independent breweries get better access to the pub market. If done right, that should mean a better choice of locally-brewed beers at the bar in pubs up and down the country.”
On the increase to the single bus fare cap
“£2 bus fares have helped to make getting to and from the pub more affordable at a time when the beer and pub trade needs as much support as it can get. Local pubs, social clubs and breweries, which are vital parts of community life, will be worried about the impact of increases in bus fares in England on the number of people who can get to and from their locals in an affordable and environmentally friendly way.”
The full Autumn Budget 2024 is available here.
