Pubs prepare for Chancellor’s Spring Statement

By Nikkie Thatcher

- Last updated on GMT

Government announcement: the Chancellor is set to reveal his Spring Statement (image: Getty/georgeclerk)
Government announcement: the Chancellor is set to reveal his Spring Statement (image: Getty/georgeclerk)

Related tags Legislation Government Finance

The sector is gearing up to hear what Chancellor Rishi Sunak has to say in his Spring Statement today (Wednesday 23 March).

Sunak will announce the details of his plan from about 12.30pm this afternoon in the House of Commons.

Yesterday (Tuesday 22 March), he tweeted: “Delivering greater economic security for our people, accelerating growth and productivity and making sure the proceeds of that growth are shared fairly.

“That is not the work of any one statement. But that work begins tomorrow. The Spring Statement starts at 12.30.”

UKHospitality (UKH) chief executive Kate Nicholls tweeted her concerns about the latest inflation rate announced, urging the Government to keep the current 12.5% VAT rate.

She said: “Inflation in January was 5.5%, now 6.2% – well above forecast – and that is before the impact of Ukraine war, sanctions and supply constraints are factored in.

“Price increases in hospitality will push this up further – peak above 8%, which is why maintaining 12.5% VAT [is] key.”

Sure up support

The Night-Time Industries Association (NTIA) warned hundreds of thousands of businesses were at the mercy of today’s announcement​.

NTIA chief executive Michael Kill said: “We must now rely on the Chancellor once again, in his mini budget, to sure up the financial support and relief to allow headroom for businesses to survive, in light of the current debt levels and cost inflation, specifically around VAT, energy and fuel.” 

Many across the industry have called on the Government to hold the 12.5% VAT rate and not increase it back to 20% next month (April) as planned.

The All-Party Parliamentary Group for Hospitality and Tourism held an inquiry​, which looked at seven areas maintaining the current 12.5% level would benefit the sector.

This included helping businesses recover financially after the pandemic, improving the rate of employment​​, stimulating further economic activity, supporting regional growth, improve international competitiveness, easing cost ​​of living pressure ​​and improving social wellbeing.

Furthermore, the British Beer & Pub Association (BBPA) wrote to Sunak​, asking for financial help for pubs ahead of today’s statement.

Sector calls

The letter urges the Government to extend the energy price cap to small businesses and supply to joint residential and commercial premises and extend the current 12.5% VAT rate for food and drinks sold in pubs and the wider hospitality sector with a view to making this permanent.

It also wants the Government to ensure ADR (alternate dispute resolution) proposals are in force by no later than February 2023, with an increase in the lower-strength threshold for beer from 3.4% to 3.5% ABV and a container size of 20 litres or above for the draught beer reduction.

The trade body called for the reduction of the disproportionate burden on hospitality businesses through either a permanent specific sector multiplier or a high streets relief, expedition of an ‘online sales tax’ to offset the cost of pubs’ rates and provision for a fairer business tax regime for the digital age.

Meanwhile, a snap poll conducted by The Morning Advertiser ​revealed keeping the lower VAT rate was the top ask​ of the 60 operators surveyed.

In addition, research by YouGov, commissioned by UKHospitality of 1,743 UK adults revealed nearly half (49%) of participants wanted the reduced VAT rate to stay​ for the long-term and almost a third (30%) wanted an extension to the reduced rate.

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