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Budget 2012: The restaurant industry's reaction

By Emma Eversham , 21-Mar-2012
Last updated the 21-Mar-2012 at 22:10 GMT

Related topics: Business, Venues, Legislation, Restaurants

Members of the restaurant industry have expressed their disappointment at the Chancellor's lack of help for the sector in today's Budget, saying his claim that he will 'unashamedly back business' means nothing if he doesn't cut VAT.

This year's Budget gives no support to the restaurant sector say independent restaurateurs

This year's Budget gives no support to the restaurant sector say independent restaurateurs

Delivering his speech earlier today in the Commons, George Osborne said he wanted to kick start the economy by cutting corporation tax and introducing a range of measures such as introducing Enterprise Loans for young people to set up a business.

However, independent restaurateurs said the only help Osborne could have given them would be to lower VAT from the current 20 per cent rate.

Karl Jones, managing director of Japanese restaurant Moshi Moshi in Brighton, told BigHospitality that cutting the rate of VAT would not only help his business survive in a tough economic climate, but would mean he could create more jobs.

He said: "Independents have been really finding it tough, but when VAT was cut to 15 per cent, suddenly everyone was able to pay their bills and they had enough to be able to employ more staff.

"Now, we are pretty much working a day and a half to pay the VAT, rather than half a day before. It's incredibly hard and there's no way we are getting the money back from elsewhere, especially when suppliers put up their prices too.

"The Government wants to help unemployment, but no-one in the UK wants to work for the wages we can pay. If they cut VAT we could afford to employ more staff."

Adrian Lowry, owner of No.27 Talbot Street in Belfast, agreed that cutting VAT for the hospitality industry, as had been done in Ireland last year, would give a boost to an industry which gave more than its fair share of support to the economy, but which gets little in return.

He said: "Other industries can claim VAT back on certain things, but we can't. The way I see it, we're just a collection agency for the British Government."

Energy costs

Lowry also said the Government's failure to acknowledge that small businesses needed fairer treatment from energy and utilities companies was hampering trade and that the Chancellor's refusal to change the duty escalator on alcohol, which will add another 11p to the price of duty on wine and 42p on a bottle of spirits was another blow.

"My energy bills are so high - they've risen 40 per cent in the last 18 months," he said. "The added duty on alcohol may not seem that much, but take into consideration the mark up on wine and it will be more like 70p to a bottle of wine. Over the course of a year that really adds up. I'm at the stage where I don't know where to turn. Nobody's giving us any help."

Consumer confidence 

In response, Mark Sheehan, managing director of Coffer Corporate Leisure, advisors on leisure property and industry mergers and acquisitions, said the restaurant sector should see the Budget in a more positive light, because tax breaks for families and the working public were a chance to gain more custom.

“The increase in the personal allowance will benefit many and the reduction in the top rate of tax will create headlines. In common with other businesses reliant on consumer spending and confidence we should see a gradual benefit as consumer confidence returns slowly,” he said.  

Sheehan also said investment tax breaks for businesses mentioned in last year’s Budget would come into force this year, making it easier for businesses who wanted to expand to gain funding. 

“This will massively help investment in our sector, given that bank lending has been difficult to obtain to help expansion over the last few years,” he said.