Budget 2016: Five things the hospitality industry wants to see

By Helen Gilbert

- Last updated on GMT

Budget 2016: Five things the hospitality industry wants to see

Related tags: Chief executive, Cut tourism vat, Business rate relief, Minimum wage, Government

With Chancellor George Osborne set to unveil his 2016 Budget Statement on 16 March, BigHospitality rounds up the key issues the industry would like addressed. 

Help to alleviate the costs of the National Living Wage

The Living Wage comes into forces on April 1. Workers in the UK aged over 25 will be paid £7.20 per hour, a 50p rise on the current rate. PwC estimates that the Living Wage will cost the hospitality industry £13.2m by 2020.

“The British Hospitality Association proposes that Budget 2016 should include alleviating measures, including reducing Employers’ National Insurance Contributions, preferably by raising the lower earnings threshold, and by delaying the Apprenticeship Levy,” Martin Couchman, OBE, BHA deputy chief executive said.

“We hope that the Budget will give us clarity on the National Minimum Wage rates to apply from October 2016, on which the Low Pay Commission’s recommendations are awaited.”

Introduce cuts to alcohol duty

Last year Osborne announced a 1p per pint cut in beer duty​ for the third year in a row. At the time the British Beer and Pub Association said the move would boost employment by 3,800 in 2015 alone, attract new capital and put £180m into the pockets of beer drinkers and pub goers.

“At present, pubs and bars are paying one-third of their turnover in taxes compared to one-fifth for big supermarkets,” Kate Nicholls, ALMR chief executive declared. “Further cuts in beer duty together with the retention of high street business rate relief would go some way to supporting hardworking venues in the short term, many of whom will see their bills increase by about £1,500 when the relief ends in April.”

“The beer and pub industry plays a vital role in the UK economy, contributing £22bn to UK GDP and supporting almost 900,000 jobs,” Frederic Landtmeters, Molson Coors managing director UK & Ireland said. “Three successive beer duty cuts have provided our industry with a much needed boost and we would urge the Government to continue supporting this important UK industry by further reducing beer duty.”

“The wine and spirit industry has faced difficult trading conditions over the past few years, seeing sales and revenues decline, which has impacted on its ability to create jobs and to invest,” Miles Beale chief executive of the Wine and Spirit Trade Association acknowledged. “Our ask of the Chancellor in the 2016 Budget is therefore very simple. To build on his admirable decisions at the last two March budgets, and to move away from some of the highest excise duty rates in the EU. We are calling on the Government to cut excise duty on wine and spirit by a modest 2 per cent.”

Brigid Simmonds, chief executive BPPA added: “A further 1p duty cut in the Budget is the one targeted measure that would ensure a pint remains affordable, help pubs, secure thousands of additional jobs, and boost investment.”

Reduce VAT on visitor accommodation and attractions 

According to Cut Tourism VAT, there are a limited number of areas where EU rules allow government to implement a reduced rate of VAT but in the case of tourism, the UK is one of only four countries not to take advantage of this. It claims British families or international visitors choosing a British holiday would pay almost three times as much VAT compared to a French or German break, and twice as much as one in Italy and Spain.

“Having created one in five new jobs in the last five years, the tourism and hospitality industry has been instrumental in helping this Government to reduce unemployment and achieve economic growth,” Dermot King, chairman of the Campaign to Cut Tourism VAT said. "[We are] calling on the Chancellor to recognise the vital economic contribution of our industry and use this Budget as an opportunity to act on the mounting evidence and political momentum that supports a reduction in Tourism VAT.”

Couchman called for “a reduction to five per cent in the rate of Value Added Tax on visitor accommodation and attractions.”

Reform of business rates 

In last year’s Autumn statement,​ the Government announced it would extend the Small Business Rate Relief for another year, following warnings from the BBPA that scrapping plans could see community pubs close nationwide. Osborne also abolished the uniform business rate in a move designed to give local councils the chance to ‘drive growth in their area’.

“It is essential that business rates reforms help the pubs sector, which is paying 2.8 per cent of the total rates bill, despite having 0.5 per cent of business turnover,” Simmonds said.

Nicholls added: “We need a clear signal from the Chancellor that he will deliver on his promise of root and branch reform of business rates and begin to share the rates burden to ensure a more equitable system. The ALMR has consistently lobbied for action on employment taxes to reduce the burdens for employers in a labour intensive sector such as ours. Only with this can we secure investment in future jobs and growth.”

Service charge distribution

The BHA is calling on the Government to introduce legislation to improve transparency around the practice of tipping​ and make businesses reveal exactly what happens to the ‘extras’ customers pay at the end of a meal.

“We are looking for a government decision to accept the BHA’s recommendation for all restaurants to provide customers with information on how service charge is distributed,” Couchman said.

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