Budget 2016: Hospitality industry reacts to 'disappointing' reforms

By Sophie Witts contact

- Last updated on GMT

Budget 2016: Hospitality industry reacts to 'disappointing' reforms

Related tags: National living wage, Chief executive, Minimum wage

The hospitality industry gave a lukewarm reception to today’s budget, with many trade bodies calling for greater support from the Chancellor.

George Osborne announced a range of measures to help the sector, including a freeze in beer duty and greater support for small businesses.

Sugar Tax

But perhaps the most controversial point was the introduction of a sugar tax on soft drinks from 2018.

The exact rate of the levy was not disclosed, though Osborne indicated it would be split in to two bands dependant on the amount of sugar per 100ml of liquid.

Though the tax has previously been backed by Jamie Oliver and a coalition of restaurants​ including Leon, Tortilla and Abokado, the Association of Licensed Multiple Retailers (ALMR) warned that costs for businesses could increase.

ALMR chief executive Kate Nicholls said: “We need confirmation that the tax on sugary drinks will be a true levy on producers and not a sales tax that will increase costs for retailers.

“The Chancellor has indicated that there will be a consultation on its introduction and the ALMR will liaise with the Government to ensure that additional costs are not passed on to pubs and bars.”

British wine suffers

There was a positive reaction from the pub industry after Osborne announced a freeze in beer, cider and spirits duty.

But despite the boost for spirits, the Wine and Spirit Trade Association (WSTA)​ said it was ‘disappointed’ that 30m wine drinkers would face an ‘unfair’ rise in duty.

“We deeply regret that the Government has missed this important opportunity to support the emerging English wine industry, which is a real home-grown success story that needs nurturing rather than being hit by another unfair tax increase,” said Miles Beale, chief executive of the WSTA.

“This will stifle the industry’s ability to invest, sustain the 270,000 jobs it currently supports and to help British pubs, bars and restaurants where it makes a significant and fast growing contribution.”

The British Beer and Pub Association (BBPA) welcomed the Chancellor’s ‘real commitment’ to both the pub and brewing industry, but warned that more support was needed.

Brigid Simmonds, BBPA chief executive, said: “We are still paying the second highest beer tax in the whole of Europe. Pubs are facing rises in costs in the coming months, from the Living Wage, the apprenticeship levy and auto enrolment pensions.”

Medium-sized businesses struggle

The threshold for small business rates is set to rise from £6,000 to £15,000, meaning that from April 2017 600,000 small businesses will pay no business rates at all.

The ALMR welcomed the steps, but called for more ‘decisive and meaningful action’ to reduce the burden on hospitality operators.

Rob Payne, CEO of Best Western Great Britain, criticised the ‘disappointing’ lack of support for medium sized businesses such as his 265-strong hotel company.

'We were looking to the Budget to provide relief from the price pressures we are facing such as National Living Wage but it was not forthcoming,” said Payne.

“Overall this was a disappointing and potentially damaging Budget for the hospitality industry. 2016 might be the year the industry is forced to change for good but not for the better."

Stamp duty

Property adviser Christie & Co welcomed the announced cut in commercial stamp duty as providing a ‘tremendous boost’ for the sector.

From midnight tonight businesses will pay no stamp duty on sites worth £150,000 or less.

Neil Morgan, managing director, Pub & Restaurants at Christie & Co said: "Our clients will be saving money from tomorrow, with a typical vendor selling a pub saving £5,000 on a pub worth £270,000.

"Tax savings for lower paid workers will leave them with more of a discretionary spend. This may give a boost to the leisure and licensed sectors."

Apprenticeship Levy

Martin Couchman OBE, deputy chief executive of the British Hospitality Association (BHA), was concerned that the planned Apprenticehip Levy would not be delayed.

"We were disappointed not to see a reduction in National Insurance and a delay in the introduction of the Apprenticeship Levy which would have been helpful in reducing the total impact of the National Minimum Wage and the introduction of National Living Wage in April this year," he said.

For a full rundown of how the budget will affect hospitality see here.

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