Budget 2021 and what it means for hospitality

Today, chancellor of the exchequer Rishi Sunak made his budget announcement to the Commons, and hospitality, retail and leisure business owners were glad to hear that business rates relief would be extended for another financial year.

Thanks to this, all eligible businesses can claim a discount of up to 50 per cent up to a maximum of £110,000 – a business tax cut the Chancellor said was worth almost £1.7bn.

Multiple other measures were announced that will relieve some of the burden on hospitality businesses, who, despite being the third biggest employer in the country, are also among those who have been hardest hit by the economic consequences of both Covid-19 and Brexit:

• A national wage increase of 6.6 percent, to £9.50 an hour
• A reform of alcohol duty, which will see higher rates placed on stronger drinks and lower rates on weaker drinks - meaning lower duty on wine, ciders, beers, liqueurs etc; an extension of small brewers relief to include small-scale cider brewers and those making drinks under 8 percent ABV; a 5 percent beer duty cut, which the Chancellor said was the biggest relief in more than 50 years.
• Increased investment in adults skills worth £3.8bn, which will go towards expanding T-Levels and provide more funding for apprenticeships

What the industry thinks

UKHospitality’s chief executive, Kate Nicholls welcomed the news of the business rates relief, and said:  “We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the Chancellor’s move today to extend the 50 per cent business rates relief for the hospitality and leisure sector for the next financial year. 

“The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.”

Meanwhile, Emma McClarkin, chief executive of the British Beer & Pub Association, was equally praising of what she called "a range of business-boosting measures" for “pubs, brewers and beer drinkers."

“The Chancellor’s decision to freeze beer duty instead of the RPI linked increase he had planned is to be warmly welcomed. It will save £177 million and secure 9,000 vital jobs across the country. 

“Pub goers will also be toasting the Chancellor today for announcing a 5 percent lower duty rate on draught beer worth £62 million. This is great news for our local pubs and recognises the crucial role they play in our economy and society."

However, blatantly absent from the budget announcement was what many in the industry have been calling for, and that is a permanent extension of VAT cuts. 

Alasdair Elwick, general manager at The Forest Side in Grasmere said: “As ever the support of the Government is welcome, However I am saddened not to hear about an extension to the VAT, In my view this was essential to the long term planning and security of our industry.

"So many business regardless of size are working tirelessly to protect what they have, at the same time as nurturing and developing their teams. The VAT extension would have allowed businesses to forecast effectively to enable a sustainable future for us all.” 

Night time economy adviser for Greater Manchester Sacha Lord said the decision would cause to more closures when it returns to its normal rate in the spring of next year. 

"Despite outward appearances and busy nightlife scenes across the UK, the sector is still struggling," he said, and "operators will take at least three years to recover from this pandemic and many remain in very precarious financial difficulties which could see them go under at any moment."