Autumn Statement 2023: how can Gov support the sector?

On Wednesday 22 November, Chancellor Jeremy Hunt will present the Autumn Statement, one of the key fiscal events in the political calendar, to Parliament and detail the Government’s tax and public spending plans.

The announcement is based on up-to-date forecasts for the Office for Budget Responsibility (OBR) and marks one of two statements made each year by HM Treasury to Parliament.

A recent snap poll by The MA​ revealed the majority of hospitality businesses would benefit most from a reduction in VAT.

The poll showed more than half (60%) of respondents needed a reduction in VAT from the statement to help keep their business “profitable”.

Licensee of the Walmer Castle pub in Notting Hill, Greater London, Jack Greenall, told The MA ​a reduction in VAT to around 12.5% for hospitality firms would be “massively appreciated”.

“We’re hugely disadvantaged against supermarkets and our European neighbours. It's the common-sense thing to do, and it would be a lifeline to many of us in this industry.

“It would help us be competitive and swallow up some of the inflationary pressures, so we don't have to pass everything on to the guest; we want consumers to be able to afford to come to us”, he said.

Much needed clarity 

However, of the 95 survey respondents, 21% felt an extension to business rates relief would be most beneficial.

UKHospitality (UKH) chief executive Kate Nicholls asserted an extension to business rates relief would be the “number one action needed from the Government.”, with a hike in business rates on the horizon for April 2024 predicted by the trade body to cost the sector almost £1bn.

She said: “This will not only help to encourage growth and investment and create jobs, but also protect venues across the UK from closure and avoid [further fuelling] inflation in the sector.”

Furthermore, Nicholls added by “acting on this issue now”, the Government would give hospitality businesses “much needed clarity”.

On Friday 10 November, industry leaders, including model turned publican Jodie Kidd and celebrity chef Tom Kerridge, joined forces with UKH to urge the Chancellor to freeze the business rates multiplier, extend the 75% hospitality relief and increase the cap to at least £2m.

The letter said: “Business rates support can cushion the sector from these costs while allowing us to invest – in our people and our places.”

Kerridge added despite “taking a battering” in recent years, pubs, bars and restaurautns across the nation had continued ot go “above and beyond” to provide outstanding experiences for consumers.

“As an industry this is what we love to do. The stark reality for many businesses, however, is that with rising costs and ongoing challenges time is running out and without further support from Government they will shut their doors”, he continued.

"Pubs, social clubs and taprooms, along with the brewers and cidermakers who serve them, are teetering over an ever-eroding cliff edge."

In addition, UKH has previously called for the Chancellor to review the apprenticeship levy as part of the statement, after figures from the Office for National Statistics (ONS) revealed vacancies within the sector​ were more than 30,000 higher than pre-pandemic levels.

The MA’s ​poll also showed 11% of operators wanted to see more done to support the sector with energy bills while 7% called for a reduction in beer duty.

British Beer & Pub Association (BBPA) chief executive Emma McClarkin described the statement as a “golden opportunity” for the Government to help pubs across the country and urged the Chancellor to “rule out” the planned increase to beer duty in February.

She said: “Beer ​duty increased more than 10% in August, and another increase would hurt pubs and brewers, further fuelling inflation.”

Moreover, McClarkin warned for Ofgem’s recommendations from the regulator’s report on the non-domestic energy market must be implemented “urgently”.

“Suppliers must continue to be put under pressure to provide fair and reasonable contracts, to avoid a second consecutive winter energy crisis for our nation’s pubs”, the chief executive added.

Data from a joint quarterly business survey by the BBPA with the British Institute of Innkeeping (BII), UKH and Hospitality Ulster earlier this year revealed many firms felt energy costs still posed a “serious threat to viability”.

According to the survey, some 15% of respondents were at risk of failure in the next 12 months with 95% of those flagging energy costs as a “significant contributor”.

This comes as data from CGA by NIQ recently showed the number of licensed premises in the UK​ had decreased by almost a third over the past 20 years, dropping to below 100,000 as of October this year.

Make or break moment 

Some 44,000 businesses had closed since 2003, according to the data, equivalent to just over six closures a day for the past two decades.

On top of this, industry leaders expressed “deep concern” when the Bank of England confirmed interest rates would remain at 5.25%​ earlier this month in a bid to reach its 2% inflation target, piling “further pressure” on firms.

Following the announcement, Bank of England governor Andrew Bailey said interest rates would be kept “high enough for long enough to make sure we get inflation to the 2% target”.

In its most recent update, the Office of National Statistics last month revealed the headline rate of inflation stood at 6.7% in September, which was unchanged from its August level.

Night-Time Industries Association (NTIA) CEO Michael Kill said: “The Government's long-term strategy to reduce inflation to 2% by the end of this year is losing credibility daily, which has a direct impact on consumer spending and business confidence within the night time economy.”

Elsewhere in the sector, The Campaign for Real Ale (CAMRA) national chairman Nik Antona also urged the Government to scrap “unnecessary rules” preventing draught takeaway sales from draught duty-paid containers.

The chairman added the statement was a “make or break” moment for the sector.

He said:  "Pubs, social clubs and taprooms, along with the brewers and cidermakers who serve them, are teetering over an ever-eroding cliff edge. 

“The Chancellor must use the Autumn Statement to help pubs, social clubs, brewers and cider makers, otherwise more communities across the UK risk losing their locals​​ forever."