The Chancellor's 2017 budget and its implications for the industry

By Georgia Bronte contact

- Last updated on GMT

 The Chancellor's 2017 budget and its implications for the industry

Related tags: National minimum wage, Minimum wage, Chancellor

Pubs had a reason to raise a glass to the chancellor’s budget today (22 November) with the announcement of a freeze in alcohol duty.

Other key points for the hospitality industry in Chancellor Philip Hammond’s budget were increases in the National Living Wage, as well as an extension to the period of discounted business rates.

The Office for Budget Responsibility has downgraded its growth forecast for next year to 1.4%, slowing to 1.3% in 2019 and 2020, and then 1.5% in 2021 and 1.6% in 2022.

Here’s a roundup of the standout points from the chancellor’s announcement, and how it will affect the hospitality industry.

Alcohol duty freeze

Alcohol duty will be frozen on the majority of ciders, wines, beers and spirits. The only exceptions come are to ‘high strength’ alcoholic drinks such as white ciders, for which duty will be increased from 2019 onwards. “I am pleased the Chancellor has listened to the industry. It's great news particularly for pubs who have been under pressure due to increased business rates and minimum wage,” says Steve Perez, founder of drinks business Global Brands. “We will toast The Chancellor with a gin and Franklin's Tonic this Christmas and make the most of it until the sugar tax comes in force in April!”

National Minimum Wage rise
The National Minimum Wage for those aged 25 will rise from £7.50 to £7.83 in April, equating to an increase of 4.4%. This boost will equate to a pay rise of £600pcm. Pay for under 25s will also increase in line with watchdog recommendations. Britain’s lowest-paid sectors are retail and hospitality, so the wage will have a relative impact on operators in these sectors. Mr Hammond is aiming to get the wage to £9 by 2020. The National Living Wage used to be known as the National Minimum Wage, but was re-named in 2016.

Fuel duty freeze
Fuel duty will be frozen for another year, despite expectations that it would be raised. This has implications for restaurant supply chains, and will help suppliers already struggling with increased costs.

VAT threshold remains
Mr Hammond announced in his speech that the threshold for VAT registration is to stay at £85,000 for the next two years, despite widespread predictions  that it would be lowered. This will save most small businesses from a large VAT burdens, he says. Although this will have limited impact on large restaurant operators, it will be greatly appreciated by smaller businesses such as street food operators and pop-ups. The Chancellor said he plans to reform VAT rather than lower it.

Plastic tax
Hammond also announced an investigation will be launched to look at how a tax on single-use plastic items could help reduce waste. The announcement coincides with a scheme being trialled in two Manchester based Pret A Manger outlets, aiming to minimise plastic wastage by introducing reusable glass bottles and filtered water stations. 

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