Lukewarm welcome: Hospitality businesses react to the Autumn Statement

By Peter Ruddick

- Last updated on GMT

Related tags: Investment, Tax

Hospitality businesses have welcomed extra cash in the Autumn Statement to spend on capital investments and the scrapping of a planned rise in fuel duty but argued the Government still needs to do more
Hospitality businesses have welcomed extra cash in the Autumn Statement to spend on capital investments and the scrapping of a planned rise in fuel duty but argued the Government still needs to do more
Businesses, the main beneficiaries of the small amount of good news delivered in the Chancellor's Autumn Statement yesterday, have begun giving their reaction, welcoming tax cuts and increased spending but calling on more to be done for the hospitality sector in particular.

While the headline news for the country as a whole may have been cuts to benefits, an extension to austerity and an increased burden for certain parts of society, the message to business was loud and clear. “We offer new support for business and enterprise, so they can create the jobs we need," George Osborne told MPs.

To reaffirm that message he announced a number of key measures designed to help businesses lead the recovery of the economy​ - a business-led recovery all the more vital now given Osborne's announcement that the Office for Budget Responsibility (OBR) predicts the economy will grow by less than previously thought despite falls in the Budget deficit. 

Cautious

A surprise cut in corporation tax to 21 per cent by 2014 - one of the lowest levels in the developed world - and an increase in the annual capital investment allowance to £250k from £25k were both widely welcomed by the business community.

However many said they would remain cautious or even cynical until they saw delivery. Phil Orford, chief executive of the Forum of Private Business, said the decision was an admission the Government had put companies off investing in the past.

Extra tax relief on small investments, an extension of business rate relief for small firms and a crackdown on tax avoidance were also hailed by companies.

The British Hospitality Association (BHA) said hospitality companies may also benefit from the scrapping of a planned 3p per litre rise in fuel duty. However La Tasca chief executive Simon Wilkinson said the industry would have preferred a cut in fuel duty to offset rising costs elsewhere.

Organisations representing hospitality businesses in particular also questioned no movement, yet again, on VAT, the beer duty escalator or red tape.

There are also fears downgraded economic forecasts and changes to tax relief on pensions could impact consumer confidence in the long run.

Autumn Statement 2012 - Business Reaction:

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Martin Couchman, deputy chief executive, British Hospitality Association (BHA)

"The Annual Investment Allowance is a key element in the refurbishment and extension of existing hotels. Before the Statement, we urged him (George Osborne) to increase this allowance and we welcome his initiative.

"In view of the cost of most hotel investments, the £25k allowance was of little value but the increase announced today – and due to be implemented from January 2013 - will be a useful boost to the hotel industry. 

"Fuel costs are a big item in domestic holidays, particularly for those travelling to far-off rural areas," Couchman added, welcoming the scrapping of the planned fuel duty rise.

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Brigid Simmonds, chief executive, British Beer & Pub Association (BBPA):

"This is a missed opportunity - employment could be boosted by 5,000, this year alone, with a freeze in beer tax – mostly jobs for younger people in Britain’s pubs. The Coalition should distance itself from the previous Government’s tax policy, and the Chancellor should now heed calls from MPs of all parties for a review.

"However, there are announcements to welcome. It is also reassuring to see that Government acknowledges that money does need to be invested in enforcement to crack down on tax avoidance, rather than lumbering UK businesses with the bill," she added.

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Simon Wilkinson, chief executive, La Tasca Restaurants:

"As an operator within the hospitality sector we all want an economy that helps put more money back into the pockets of everyday people and also encourages job creation to get people off benefits and back to work. So I am encouraged to see investment in new free schools and further education. If that can be introduced quickly to help stimulate the construction industry as well, all the better.

"I am pleased to hear the 3p fuel duty for January is cancelled. However I would like to have seen cuts in fuel duty as its price affects many other costs. As well as buying better quality food products we have had to absorb fuel cost increases, food price increases and annual wage bill increases, so a cut to fuel duty would have been very welcome," he added.

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Phil Orford, chief executive, The Forum of Private Business: 

"The increase in the Annual Investment Allowance to £250k is welcome but a tacit admission that the decision to cut the same allowance to £25k this year was a wrong one. Given that UK businesses are currently sitting on £700bn of cash reserves, it could be argued that the earlier actions of the Chancellor created a disincentive to invest through 2012, at a time when business needs confidence to create growth. 

"Nevertheless, we welcome this increase and urge businesses to take advantage of it," he added as he also welcomed the scrapping of the fuel duty rise. Orford also praised the Government for tackling tax avoidance but said businesses were still waiting to see action on the so-called 'business bank'.

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John Longworth, director general, British Chambers of Commerce (BCC):

"The Chancellor has taken a number of very positive steps, despite being constrained by politics, budgets, and Whitehall inertia. Business will cheer his announcement of major new capital allowances to encourage investment by small and medium-sized companies, as well as his move to shift money from current spending towards the infrastructure needed for growth.

"However, the Government is still tinkering around the edges. The Budget next March must make truly radical and large-scale choices that support long-term growth and wealth creation," he concluded.

beacon_purchasing

Steven Henderson, managing director, Beacon Purchasing:

"The continued downgrading of UK growth rates is a worry for us all and it becomes increasingly confusing to get to the real deficit and borrowing figures.

"We feel the Government has missed an opportunity to help these businesses by not choosing this time to adopt the BHA’s 5 per cent VAT on tourism proposals.

"On a more positive note, we are encouraged by the announcement that the 3p per litre fuel duty rise has been cancelled. This is good news for our suppliers distribution costs and avoids one inflationary impact on the prices our customers pay."

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