‘Mere sticking plaster’: Disappointment as chancellor fails to unveil new relief for hospitality

The extension in business rates relief in today's Autumn Statement has been described as “a drop in the ocean” by operators.

Chancellor Jeremy Hunt announced the 75% discount for retail, hospitality, and leisure businesses, introduced in the wake of the pandemic, will be extended for another 12 months.

The discount allows businesses to claim relief up to £110,000, saving the average pub £12,800 a year.

James Robson, founder of Fallow Restaurant in London’s St. James’s, described the business rates relief extension as “mere sticking plaster” that fails to provide “resolution for the long term”.

“Generally, they’ve done just enough to keep the strongest of businesses alive, however little to help small good businesses who will have serious challenges coping with the increase in National Living Wage,” he said.

Paul Askew, chef patron of the Art School in Liverpool, told The Caterer: “If we’re turning over £1.4m and business rates is £50,000 a year, £50,000 is still a lot of money, but in the grand scheme of things it’s absolutely miniscule, so for me it’s a token gesture.”

Although he said “any help is welcome”, he stressed business rates relief is a “drop in the ocean” compared to the hoped for reduction in VAT from the standard rate of 20%.

He said the almost 10% increase in National Living Wage from April 2024 could also lead to a “massive re-evaluation of all workforces in the New Year”.

“While part of me wants to see that wage increase, I think the timing of it is very poor. We pay very well, but there is a limit to affordability. What the government has done with the Living Wage is commendable in one way, but businesses have to be able to afford it,” Askew added.

Howard Thacker, owner of pub and restaurant group Berkeley Inns, including the Horseshoes and the Bluebell Inn in Derbyshire, described the increase in National Living Wage as the “most significant body blow” in the Autumn Statement. He said: “Very few pub businesses are profitable due to the enormous cost increases in energy, food, drink and labour over the last two years. This latest increase in the living wage will be the end for many in our industry.”

His views were echoed by Stosie Madi, owner and head chef of the Parkers Arms in Lancashire, who added: “Devastated once again to see no VAT reduction, which does not bode well with yet more rising costs in the form of wages.”

Angus Brydon, managing director of BM, commented: "Whilst we are pleased that the increase in National Living Wage will mean extra money in the pockets of our team members, more needs to be done to alleviate the extra funding required to pay for increases."

Kate Nicholls, chief executive of UKHospitality, raised further concerns over the standard multiplier for business rates rising by 6.4% next April, in line with inflation.

“The standard multiplier rising by 6.4% will see businesses representing almost two-thirds of the sector’s trade still facing a £150m rates hike. This will only put more pressure on consumer prices and inflation, at a time when businesses are still grappling with high costs of energy, food, drink and wages,” she said.

John Webber, head of business rates at Colliers, warned this will have a “dire impact and certainly dampen expansion and growth plans” for many hospitality businesses facing a stark rise in rates bills in the New Year.

“For some businesses it might be the last straw. The situation is even more bizarre when we see the current inflation figure has already fallen to 4.6% and may be around 3% next April, but we would see such businesses tied to the 6.62% figure for the year,” he added.

However, David McDowall, chief executive of Stonegate Group, responded positively to the freeze in alcohol duty and the extension in business rates relief, which he said will “provide some respite and comfort to the hospitality sector which has battled against a triple threat of soaring energy costs, rampant inflation and cost of living pressures over the past year”.

Ed Baker, managing director of Kingsland Drinks, a UK supplier of wines and spirits, added: “The 1 August increases are making the UK consumer pay some of the highest alcohol taxes in Europe which are now filtering through to higher pricing for them and lower sales for us; an additional rise would have damaged our industry even further.”

Sacha Lord, night time economy adviser for Greater Manchester, said the business rates relief will “allow operators a bit of breathing space” while the industry prepares to call for a VAT reduction in the Spring Budget.