Bacta happy to get some ‘sweeties’
JOHN WHITE CHIEF EXECUTIVE
It wasn’t worth waiting up all night for Santa but Bacta did take some positives from the chancellor’s budget statement this week. Business rates reduction, beer duty freeze and the prospect of extra cash percolating around the system are all good for the sector. But still no MGD cut which is really what the industry needs.
The budget statement may have raised an eyebrow or two across the country. Although many initiatives had been trailed across the media, much to the Speaker’s ire, there was still a sense of questioning as to why we were getting a £150 billion giveaway, when we had just been through a pandemic lockdown costing just south of £400 billion.
The answer is simply paying that enormous sum back over the long term on low interest rates is not nearly as impactful on yearly horizons as we may think, and with economic growth and forecast growth way ahead of expectations, the Chancellor was in the very happy position to hand out some sweeties.
• As a top-line we did get something we argued for in our budget submission and lobbying, namely an extension of business rates relief for the Retail, Leisure and Hospitality Sector, albeit at 50 percent rather than the 100 percent requested. We still have yet to see allthe detail, but if confirmed, this is a major win for members and will really help cement the recovery. This is up to a cap of £110K
• On rates, every business will from 2023 be able to make property improvements without paying extra rates for 12 months
• Other good news was that gaming duties will rise with inflation. No one likes an increase of course, but the temptation to introduce above inflation increases must have been achingly tempting
•National Living Wage – The Chancellor announced that on 1 April 2022 the National Living Wage (NLW) will rise by 6.6 percent to £9.50/hr
• National Minimum Wage – The government is also increasing the National Minimum Wages
• Alcohol Duties – Planned increases in alcohol duty cancelled, duty will remain frozen for the second year in a row, with duty rates on draft beer and cider being cut by 5 percent
• Kickstart scheme – funding to extend the Kickstart scheme to March 2022, which has supported nearly 95,000 young people to date, and investing over £60 million over the next three years in the Youth Offer, which helps young jobseekers gain new skills, build their confidence and find lasting work
• Apprenticeships – The government is increasing apprenticeships funding to £2.7 billion by 2024-25 – the first increase since 2019-20.
• Apprentice hiring incentive – Government will also be extending the £3,000 apprentice hiring incentive for employers until 31 January 2022)
• Retraining – The government will increase skills spending by 26 percent over this Parliament including an increase in apprenticeships funding, expanding the Lifetime Skills Guarantee on free Level 3 qualifications.
The Chancellor also spoke a lot about ‘Levelling Up.’ This is one of the key government themes and will be so through to the next election, and incidentally one with which our industry can very constructively chime. Most of the money flowing from this political ambition was for some big funds and initiatives, but one did catch my eye as potentially of value for AGCs. The High Street Heritage Action Zone programme – provides funds to regenerate historic town centres (and has existed in a slightly different form for a couple of years).
Gambling Business Group
“We have to identify the huge importance for retail gaming to have stake and prize levels that keep pace with inflation…”
PETER HANNIBAL CHIEF EXECUTIVE
The industry will be pleased in general with the budget, but its core list of targets remain on the GBG agenda. Peter Hannibal explains.
On balance, I think that the industry and the business community in general will be pleased with this budget – with all of the usual caveats regarding the detail and small print.
We welcome the 50 percent business rates relief for the hospitality and leisure sector and the moves on alcohol duties. On the down side the GBG would have liked to see him maintain the 12.5 percent rate of VAT for the hospitality sector and a reduction in MGD – the machine industry’s equivalent.
The increase in real time wages will result in more money percolating its way around the economy which is good news for leisure.
We have to identify the huge importance for retail gaming to have stake and prize levels that keep pace with inflation. With inflation in hospitality running at 13 percent the increase in costs come off the bottom line of thousands of businesses on the high street.
Inflation is a killer for businesses that are unable to pass on costs to consumers.”
A warm welcome but more is needed
KATE NICHOLLS CHIEF EXECUTIVE
They pushed for 12.5 percent VAT on a permanent basis, but the chancellor gave hospitality a different package with a temporary business rates cut the big win. As grateful as it is, UKHospitality still oversees a fragile sector and that point was very clearly made: the economic recovery needs a vibrant and secure hospitality sector.
We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the Chancellor’s move today to extend the 50 percent business rates relief for the hospitality and leisure sector for the next financial year. The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.
“The Chancellor’s announcements simplifying – and in many cases reducing – alcohol duties, are great news for pubs, bars and restaurants, and will benefit all. The Chancellor has shown real innovation and creativity in reforming an archaic system of duty, which we applaud.
“Positive as these announcements are, hospitality remains incredibly fragile, facing myriad critical issues. Rising utility bills, wage bills and food and drink prices have resulted in 13 percent inflationary costs that businesses are having to absorb at the same time as they navigate severe supply chain issues and chronic staff shortages. Given this toxic cocktail, it is imperative the Government go further to support businesses in our sector.
“The most effective way to achieve this would be to maintain the current lower 12.5 percent of VAT for the sector. The Chancellor has been bold and radical with alcohol duty – we urge him to adopt the same approach when implementing root and branch reform of business rates, to ensure industries share the burden equally.
“Hospitality has shown this summer that it has the potential to kickstart the nation’s recovery and deliver jobs, growth and investment at pace across all parts of the country but that could grind to a halt next year. It can only lead recovery with the right measures of support in place.”
“Support worth £440 million good news for pubs and breweries”
EMMA MCCLARKIN CHIEF EXECUTIVE
If there was a winner in this year’s autumn budget, then pubs took the honours. A beer duty freeze, business rates concessions, and even a celebratory trip to the boozer by the chancellor and prime minister – what more could the BBPA want. There is a shopping list – this was a budget that still has more to deliver… a lot more.
Pubs pay 2.5 percent of Business Rates despite accounting for only 0.5 percent of rateable turnover – an overpayment of £570m. Cancelling the rates multiplier and cutting rates for pubs by 50 percent for one year is a much-needed boost to our sector in its fragile recovery.
“The 50 percent cut to business rates alone will save pubs £169 million. However, the cap of £110,000 per business is a huge dampener and means a significant number of pubs will not benefit from the relief at all.
“The multiplier freeze will save English pubs £32 million.
“The announcement that business rates revaluations will happen more frequently is also welcome, as is the one year improvement allowance. However, we remain concerned that for the longer term the inherent unfairness of the business rates system for pubs has not been addressed.
“The Chancellor’s decision to freeze beer duty instead of the RPI linked increase he had planned is to be warmly welcomed. It will save £177 million and secure 9,000 vital jobs across the country. Clearly, the Chancellor listened to the 134,000 people who signed the Long Live The Local petition calling on him to support pubs and brewers in the Budget.
“Pub goers will also be toasting the Chancellor today for announcing a 5 percent lower duty rate on draught beer worth £62 million. This is great news for our local pubs and recognises the crucial role they play in our economy and society. However, the overall beer duty rate in the UK remains amongst the highest in Europe. It is vital for Britain’s brewers, a world class homegrown manufacturing success story, that the overall beer duty burden is reduced – not just duty on draught beer in pubs.
“Beer is a low-strength product and breweries have invested heavily in developing a range of innovative, exciting and great tasting low and no alcohol beers. We therefore welcome proposals to reduce duty on lower-strength products as part of the proposed modernisation of the alcohol duty regime to better incentivise the consumption of lower-strength drinks.
“Overall, this has been a good Budget for pubs as they recover from the pandemic. The measures announced today will help pubs and breweries play a leading role in levelling up the economy and building stronger, more vibrant communities throughout the country.”
Federation of Small Businesses
“Is there enough here to deliver the Government’s vision for a low-tax, high-productivity economy? Unfortunately not….”
MIKE CHERRY NATIONAL CHAIR
This Budget has delivered some measures that should help to arrest the current decline in small business confidence. But, against a backdrop of spiralling costs, supply chain disruption and labour shortages, is there enough here to deliver the Government’s vision for a low-tax, high-productivity economy?
Unfortunately not. Where inflation and forthcoming tax hikes are concerned, the clouds are gathering.
It’s good to see the Chancellor embrace our recommendation for business rates reform: changing the system so it stops hitting small firms that invest to make their premises more sustainable with higher bills. That said, much more will be needed to support small employers in the months ahead. Our call for an increase in the Employment Allowance to £5,000 would have made a real difference to efforts to increase wages, retain staff and create jobs as we head into the critical festive season. Wider rates reform is positive, especially the promise of a substantial discount on bills for the hard-hit retail, leisure and hospitality industries, alongside cancellation of an increase in the rates multiplier.
We’ve always said that it doesn’t make sense for those travelling overseas to pay less in air passenger duty than those who choose to support UK holiday destinations. Today’s reforms to the levy mark a victory for common sense.
“If the OBR’s concerning inflation forecasts come to pass at the same moment when national insurance contributions and the living wage rise significantly, many small firms will be considering their futures – we’ve already lost close to half a million over the last year. National insurance contributions serve as a jobs tax, one which threatens to seriously hamper our economic recovery over the coming months if the planned increase to them is left unaddressed.”
British Chamber of Commerce
“This will provide much needed relief for businesses”
SHEVAUN HAVILAND DIRECTOR GENERAL
There is much to welcome in this Budget for business communities across the UK.
The Chancellor has listened to Chambers’ long-standing calls for changes to the business rates system and this will be good news for many firms. This will provide much needed relief for businesses across the country, giving many firms renewed confidence to invest and grow.
“Additional investment in skills, infrastructure and better access to finance will be key drivers for our economic recovery and will provide longer-term benefits and opportunities for businesses across the country.
Businesses have been battered by 18 months of the pandemic and problems around supply chain costs and disruption, labour shortages, price rises, soaring energy bills and taxes and there may still be difficult months ahead. If firms face unexpected bumps in the road, the Chancellor must be prepared to take further action to enable the economy to fire on all cylinders again.”
British Retail Consortium
“… a Budget that does not do enough to reduce the burden of costs bearing down on our shops, our high streets and our communities….”
HELEN DICKINSON OBE CHIEF EXECUTIVE
Today, the Chancellor spoke of a new age of optimism, but retailers will struggle to share his confidence after a Budget that does not do enough to reduce the burden of costs bearing down on our shops, our high streets and our communities. This budget is a missed opportunity for retail and the three million people who work in the industry, and it prevents retail from maximising its contribution to the government’s levelling up agenda.
With firms still stuck on property valuations from 2015, the move to a three-year revaluation cycle, supported by a properly funded VOA, is welcome and is a clear acknowledgement that rates have fallen well out of kilter with the wider property market. The freeze in the multiplier is positive, though the evidence is clear that the current rate – over 50 percent in England – is already far too high.
Currently, retailers are grappling with an assortment of government-imposed costs – higher National Insurance Contributions, higher Corporation Tax, sky high business rates – at a time when sales are slowing and supply chains are experiencing significant disruption.
Unfortunately, the combined impact of additional costs will add to the pressure on prices – with three in five retailers saying that prices will rise before Christmas.”
Institute of Directors
“….with hefty hikes in other taxation on the horizon, that may not be enough to convince business leaders to press go on their plans for growth….”
KITTY USSHER CHIEF ECONOMIST
The crucial test for this Budget was whether it gave business the confidence to invest. The Chancellor’s business rates and R&D tax credit reforms are welcome but with hefty hikes in other taxation on the horizon, that may not be enough to convince business leaders to press go on their plans for growth.
He had an opportunity to partially reverse his previous decisions on employment and profit taxes, made in tougher times, but he chose not to do so.
While promising a ‘skills revolution’, the actual measures that were announced, while welcome, felt piecemeal, and will not give business confidence that we have a coherent plan to prevent future labour shortages for our post-pandemic era outside the EU.
The IoD Economic Confidence Index for September showed that business confidence has deteriorated dramatically from a high in June-July 2021. The national insurance rise was a significant contributory factor in the sharp decline in this economic confidence. Over two thirds of our members (68 percent) oppose the rise in employers’ NI and three in ten said it will negatively affect hiring decisions.”