What does the Autumn Statement mean for hospitality?

By Sophie Witts contact

- Last updated on GMT

Autumn Statement 2016: What does it mean for hospitality?

Related tags: Hospitality industry, Economics, Chancellor

The Autumn Statement has received a lukewarm response from the hospitality industry after the Chancellor offered help for rural businesses, but failed to cut tourism VAT.

Delivering the country’s first post-Brexit budget, Philip Hammond said his priority was to keep Britain as the ‘number one destination for business’.

Support for rural pubs

Hammond announced a £6.7bn package to cut business rates, including lowering the transitional relief cap from 45 to 43 per cent in 2017 and from 50 to 32 per cent in 2018. 

“It’s complicated but good news,” he said.

The Chancellor is also giving small businesses in rural areas a tax break worth up to £2,900 per year by increasing Rural Rate Relief to 100 per cent.

“For too long economic growth has been to concentrated in London and the South East, that is not just a social problem, it’s an economic problem,” said Hammond.

The British Beer and Pub Association (BBPA) welcomed the plans, but said it had written to the Chancellor asking for broader reforms than were seen in today’s announcement.

“We want to see enhanced relief for pubs that will be hit hardest by the 2017 revaluation, and an overall review of how rates impact on Britain’s pubs,” said BBPA chief executive Brigid Simmonds.

Living Wage

The statement confirmed that the National Living Wage (NLW) will rise by 30p an hour to £7.50 in April 2017.  

“That’s a pay rise worth over £500 a year to a full-time worker,” said Hammond.

However, the change brings mixed news for the hospitality industry, which is facing a wage bill of £13.2m over the next four years​ if the rate continues to grow to £9 per hour by 2020.

Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers (ALMR), said: “The increase to the rate of NLW is lower than previously forecasted and will put money back in the pockets of our customers, but will still tighten margins for businesses and some will struggle to afford it.”

Beer stays safe

There was no mention of a rise in beer duty, which was praised by both the BBPA and the Campaign for Real Ale (CAMRA).

“We are now calling on the Chancellor to cut beer duty in the 2017 Spring Budget, and tackle the unfair burden it places on Britain’s beer drinkers, publicans and brewers,” said Simmonds.

A ‘missed opportunity’

Once again there was no reduction in tourism VAT, despite a cross-party group of MPs supporting​ a cut from 20 to five per cent.

British Hospitality Association chief executive Ufi Ibrahim said it had been another ‘missed opportunity’ for the Government to support the industry.

“The UK’s hospitality and tourism businesses are already experiencing increased costs as a consequence of the fall in the value of Sterling with the price of building materials, cotton and imported food and beverages climbing,” she said.

“[Cutting VAT] is a sure fire way to encourage more people, both domestic and foreign, to enjoy holidays here and would make the UK more competitive with our European competitors, the vast majority of whom have lower tourism VAT rates than us."

The last Autumn Statement

Hammond’s final announcement was to abolish the Autumn Statement altogether, meaning that from 2018 the hospitality industry will only have to deal with unexpected legislation once a year.

In 2017 there will be an Autumn Budget, followed by a Spring Statement in 2018 responding to the Office for Budget Responsibility (OBR) forecast.

"I will not make significant changes twice a year just for the sake of it," said Hammond.

Autumn Statement 2016: Five things the hospitality industry wants to see

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