Coalition government good news for hospitality

By Becky Paskin

- Last updated on GMT

Related tags Hospitality industry Tax

A higher personal tax allowance would encourage consumers to spend more
A higher personal tax allowance would encourage consumers to spend more
The new coalition government formed by the Conservatives and Liberal Democrats yesterday should have a positive effect on the hospitality industry, experts have said

The new government, headed by Conservative party leader and now British Prime Minister David Cameron, has agreed on several policies considered to be beneficial to the hospitality industry.

The Federation of Small Businesses (FSB) has welcomed the decision to reverse the one per cent increase in employers National Insurance Contributions (NICs), and the adoption of the LibDem policy to increase personal tax allowance to £10k as a long-term goal, which they believe would encourage more people into work and consumers to increase spend.

John Walker, national chairman of the FSB, said: “We welcome the certainty that the coalition government provides to businesses. While compromises have been made, the policies laid out will help to safeguard business confidence allowing it to support further economic recovery.”

More attention for British tourism

The British Hospitality Association also welcomed in the new government with hopes for more attention to be given to British tourism.

Bob Cotton, chairman of the BHA, said: “We’re pleased that we have a government that can give stability for the country and has a clear view of the way forward.

“For the hospitality industry, we're cautiously optimistic and look forward to the government taking tourism more seriously than the previous administration did, with more support for investment and greater co-ordination of Whitehall policies affecting the industry, particularly in the regulatory area.”

Higher VAT rate

However, Numis Securities, the independent investment banking group, has expressed its concerns that a potential higher VAT rate of 20 per cent posed an immediate risk to both consumers and businesses, the latter of which may be under pressure to absorb the rise.

Some of the key policies agreed by the Conservatives and Liberal Democrats, which may affect the hospitality industry, include:

  • Partial reversal of Labour’s planned increase in payroll tax Long-term goal to raise the personal income tax allowance to £10k, starting with a substantial increase from April 2011
  • Abandoning plans to increase employers NICs
  • Commitment to make more credit available for small and medium sized businesses (SMEs), with the potential for a loan guarantee scheme and net lending targets for nationalised banks
  • A cap on immigration
  • Backing an environmental programme to encourage a low-carbon, eco-friendly economy

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