Changes to business rates
It had initially been hoped that the Autumn Budget would herald a major overhaul of the business rates system. However, it is now understood that 'wholesale reform' of the controversial levy has been 'thrown into the long grass' for a second time, with only smaller scale tweaks expected today. Kate Nicholls, chief executive of UKHospitality, has suggested that while the potential delay in the business rates review might be a 'disheartening prospect', it could be a situation that ultimately benefits the hospitality sector. Speaking to the Daily Mail, Nicholls said: ”The delay is hopefully an indication that the Chancellor recognises the considerable extent of necessary changes the system will require.” The Treasury is still expected to publish its review into business rates today as part of its Spending Review, after it publication was delayed beyond the earlier Budget in March this year.
Rise in National Living Wage
It has been confirmed that a 6.6% rise in the National Living Wage to £9.50 per hour will be announced in the Budget. This is one of the largest increases seen for the living wage, with the rise worth £1,074 extra a year before tax for a full-time worker and follows the recommendation of independent adviser the Low Pay Commission. There will also be rises in the minimum wage for workers aged 21 and 22 years old, from £8.36 to £9.18 – a 9.8% increase. The rate for 18 to 20-year olds will rise from £6.56 to £6.83 and for 16 and 17-year olds it will rise from £4.62 to £4.81 – up 4.1%. While the hourly rate for apprentices will increase by 11.9% to £4.81. Chancellor Rishi Sunak has said the rise 'ensures we're making work pay and keeps us on track to meet our target to end low pay by the end of this Parliament'.
A lower rate of VAT?
Under its #VATsEnough campaign, UKHospitality has been leading calls for the Chancellor to make the current 12.5% VAT rate for hospitality permanent, claiming that it will enable sector businesses to create 125,000 jobs; rebuild their balance sheets; boost investment; avoid damaging price increases; and accelerate the UK’s post-pandemic economic recovery. In support of the campaign, more than 200 hospitality leaders signed a letter to Sunak earlier this week that set out a series of potential benefits to locking in the reduced rate. Without an announcement today, VAT will return to its pre-pandemic level of 20% in April 2022, just as next year’s peak season begins. It was previously reduced to 5% by the Treasury in July 2020 following the first national lockdown, and rose to an intermediate rate of 12.5% earlier this month.
Recovery loan scheme extension
Reports suggest Sunak will announce a six-month extension of the Government’s recovery loan scheme as part of his Budget. Launched in April 2021, the scheme is currently due to end on 31 December this year. Created as a bridge between the more generous Coronavirus loan schemes and more normal credit conditions the scheme provides credit worth up to £10m and comes with an 80% government guarantee for lenders. Data has not yet been published on how much money has been lent under the scheme, however banking sources have said that the volume of loans has been lower than expected. Under three earlier Government-backed lending programmes, including the business interruption loan and bounce back loan schemes, almost £80bn of loans were issued to help companies through the pandemic.
Possible changes to alcohol duty
More than 100 Conservative MPs recently made a fresh plea to the Chancellor to do more to support pubs and clubs in the Budget. In a letter they called on him to maintain a freeze on alcohol duties, and also urged him to introduce a cut in duty for draught beer. “A lower beer duty on draught sales in pubs, clubs and bars, compared to off sales in supermarkets, would be a huge boost to their ability to prosper and rebuild from Covid-19,” the MPs wrote. “Moreover, it would be easy to understand, simple to administer, and importantly, demonstrate this government’s clear commitment to Britain’s pubs.”