Budget plea letter sent to Philip Hammond to protect sector

By Stuart Stone contact

- Last updated on GMT

Pressure mounting: hospitality businesses want action from Chancellor Philip Hammond
Pressure mounting: hospitality businesses want action from Chancellor Philip Hammond
UKHospitality and a coalition of leading hospitality businesses have written to Chancellor Philip Hammond to call for targeted support in the Autumn Budget on 29 October.

‘Budget asks’ for the Chancellor

The letter sent to Chancellor Philip Hammond includes five clear Budget asks:

  • Introducing an online revenue tax to freeze business rates increases and introduce enhanced hospitality rate relief over the next two years ahead of the next revaluation to deliver your pledge to level the playing field between ‘bricks and mortar’ and ‘clicks and mortar’ entrepreneurs ahead of root-and-branch reform – hospitality generates 5% of GDP but pays 20% of all rates, which is unsustainable.
  • Doubling the National Insurance contribution threshold for employers to safeguard youth employment, training and take-home pay – half of all operating costs in hospitality are labour-related and we want to have the ability to deliver our pledge to make hospitality the best-rewarded sector in the UK and improve productivity.
  • Ensure future national living wage rates and structure are set independently by the Low Pay Commission, with evidence-based consultation with business taking account of the impact on jobs, the wider economy and take-home pay.
  • Re-introduce hospitality capital allowances – and introduce a business rate moratorium after refurbishment – to incentivise regeneration and investment ahead of root-and-branch reform of rates.
  • Implement the Northern Ireland VAT review on tourism services and extend it to the whole country as well as freezing alcohol duties to promote exports, improve the balance of trade and create new jobs across the country.

The group hopes to encourage the Chancellor to protect the valuable contribution made by the hospitality sector – which employs 3.2m people and contributes £130bn to the UK economy – through measures such as an online revenue tax as part of a fairer tax system. 

The letter details a growing crisis in the hospitality sector and on the high street, which has led to failing businesses, declining numbers of new openings, the erosion of operating margins and job losses.

Moreover, 150 hospitality businesses will meet more than 60 MPs at Westminster on 9 October to champion the sector’s contribution to the high street,​ as reported by The Morning Advertiser​.

The letter states: “On a daily basis, the British public are witnessing the impact this is having on their high streets and their local restaurants or pub.

“The health of the high street is often how consumers and voters judge the health of the economy, regardless of the national picture, and what they are seeing and experiencing is damaging consumer confidence.

“We believe that we are only at the start of the crisis in hospitality. It is vital, therefore, that steps are taken at the forthcoming Budget to support and sustain this engine of economic growth and the contribution it makes.”

It follows news reported by The Morning Advertiser ​that more than 90% of Conservative voters believe that Chancellor Phillip Hammond should change tax rules​ to ensure that large international firms like Amazon pay more tax – a stance shared by pubs minister Jake Berry.

Grown-up partnership

Beds & Bars chief executive Keith Knowles commented: “This Government needs to decide if it wants to create the environment for recession or an environment for stability and growth.

“At the moment it appears to be opting for the former. Hospitality businesses like pubs, restaurants, hotels and leisure attractions are saddled with excessive and increasing taxation and regulatory costs by a Government that seemingly fails to understand the seriousness of the situation.

“Business rates is just one area of taxation where bricks and mortar hospitality businesses are at a huge disadvantage compared to digital companies. At Beds & Bars, we are facing huge double-digit hikes across a number of our UK sites that will severely restrict our ability to invest and create jobs. As a group, our total rates bill is increasing by £675,000 next year – a rise of 64%. The Government must recognise the damage this outdated tax is having on the sector and press ahead with root-and-branch reform immediately.”

Stonegate Pub Company chairman Ian Payne said: “According to BBC News, Amazon Services UK had a total tax bill in its last financial year of £4.6m, £2.9m of which was deferred, meaning they actually paid £1.9m. Compare that to the taxation of leisure and hospitality businesses in the UK.

“Look at the inequity of business rates alone: in the case of Stonegate, our rates bill alone of £33m is almost 20 times greater than the amount of tax that Amazon paid. And yet our turnover was around a third of Amazon's, at £700m versus £2bn. 

“It's clear that we need Government to provide a fairer and more progressive means of taxing business, and one more closely aligned to revenue generation.”

UKHospitality chief executive Kate Nicholls added: “We want a grown-up partnership with Government based on an inclusive and integrated policy framework that champions the contributions this sector makes to the UK economy and society.

“We need a Budget that supports us in the vital role our business will play in delivering a strong economy, productivity and job growth as we go through the fourth industrial revolution and as we exit the EU.”

Signatories to the letter are:

All Our Bars, Anglian Country Inns, Azzurri, Bartlett Mitchell, Burger King, Butlins, Casual Dining Group, Deltic Group, GC Mallen, Greene King, Haulfryn Group, Loch Melfort, Masala World, Merlin Entertainments, Mitchell & Butlers, New World Trading Co, Novus Leisure, Oakman Inns, PizzaExpress, Pizza Hut Restaurants, Queensferry Hotels, Revolution, Shearings, Stonegate Pubs, The Pub People Company, Thorley Taverns, Thurlestone Hotel, Wagamama, Whitbread, Whiting & Hammond, YO! Sushi, Hospitality Ulster and the Scottish Tourism Alliance.

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