Budget 2013: What the hospitality industry is hoping for

By Peter Ruddick

- Last updated on GMT

Related tags: Hospitality industry, Tax, Chancellor

The Chancellor George Osborne will deliver his 2013 Budget today with businesses, including those in the hospitality industry, watching closely
The Chancellor George Osborne will deliver his 2013 Budget today with businesses, including those in the hospitality industry, watching closely
Today, once again, the Chancellor will present a Budget which will be closely watched for signs of improvement in the economy or help for businesses, but with rumours swirling about the future of the beer duty escalator, hospitality industry professionals will be among those watching most closely.

George Osborne will rise to his feet at 12:30pm for his fourth Budget as Chancellor but with little sign that the headline economic figures will be any brighter than in his first speech.

Sending his first ever tweet earlier today, Osborne hinted that he would be backing hard-working Britons with commentators expecting him to increase the personal tax-free allowance and can a rise in fuel duty which had been planned for September.

Both measures are designed to help boost consumer confidence, which will be welcomed by hotels restaurants and pubs which rely on consumer spending.

However, the Chancellor is also expected to report that the independent Office for Budget Responsibility (OBR) has once again downgraded growth forecasts increasing the prospect of a triple dip recession. Coupled with high inflation, these negative growth outlooks are likely to put further pressure on consumer spending and business investment which, it is hoped, will lead any economic recovery.

BigHospitality will be tweeting all the details of #Budget2013​ which will impact the hospitality industry - for all the latest, follow us on Twitter.

Hospitality hopes

The hospitality industry will be hoping for further measures to help businesses such as cuts in corporation tax (which was cut last year to 21 per cent) or business rates.

“This is a defining week for the Chancellor,” said Alex Jackman, head of policy at The Forum of Private Business (FPB). "Budgets are never an event to fly under the radar but this one is significant.

“Business rates and fuel head the list of businesses biggest costs and some longer term certainty – rather than incremental postponements – over both of those would help enormously. On fuel we would love to see the Government get serious on fuel duty, not with just another postponement, but an outright cut to put money back in to the pocket of consumers," Jackman added.

The FPB is also hoping for cuts in business rates and more support to the Funding for Lending Scheme (FLS) which is designed to help increase availability of loans to small and medium sized businesses (SMEs).

VAT and alcohol duty

The British Hospitality Association (BHA), would welcome a cut in VAT for the hospitality and tourism industries but, as the previous Hospitality Minister told BigHospitality,​ a number of sectors are calling for a cut below the 20 per cent level for their businesses. 

The Chancellor would be hard-pressed to cut VAT for the hospitality industry and not others.

Following last year's fiasco surrounding the so-called Pasty Tax,​ there are signs the Government will budge on another unpopular measure of taxation - alcohol. Political commentators are predicting the Chancellor will cancel a planned 6p increase in beer duty and abolish the controversial escalator.

If the predictions prove correct, the removal will be welcomed by industry bodies including the British Beer and Pub Association (BBPA) and the Association of Licensed Multiple Retailers (ALMR).

“Tax policy remains the single biggest barrier to growth in our sector," said Kate Nicholls, strategic affairs director for the ALMR.

"Since the beer duty escalator took effect, pub taxes are up 21 per cent - the average pub now pays just under half of its turnover in taxes of one sort or another - and operating costs arising from legislation are up 13 per cent. But our record in job creation is down – from 1 in 5 of all new jobs created to 1 in 8.

"The Chancellor has a unique opportunity to deliver jobs and growth in a vibrant, dynamic industry – let’s hope he is brave enough to take it," she added.

However the abolition of the escalator for beer could come at the cost of duty on other drinks with high alcoholic content such as cider and wine.

BigHospitality will be tweeting all the details of #Budget2013​ which will impact the hospitality industry - for all the latest, follow us on Twitter.

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1 comment

VAT Reduction Required for Hospitality Industry

Posted by Michelle Ward,

I believe a VAT reduction of 5% is essential for the pubs to survive unless they take the booze of the supermarket shelves. Elsewhere in Europe cutting the VAT on the hospitality industry is resulting in more investment, more jobs and improving Tourism

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