Autumn Statement

Crumbs of comfort as VAT pleas ignored

By Ed Bedington

- Last updated on GMT

Autumn Statement fails pubs on VAT

Related tags Budget Government Autumn Statement Legislation Pub & bar Business rates Business rate relief Vat Utilities National living wage

Well, we knew it was going to be grim, and any suggestion of support was going to be highly unlikely, but those who were hoping for VAT reform will have been left dismayed by the Chancellor's Autumn Statement.

Despite acknowledging the fact that the UK’s rate of VAT was double the average across the EU, and an industry campaign to call for a cut to help desperate hospitality businesses survive the economic catastrophe they are facing, the Chancellor Jeremy Hunt decided to “maintain it at that level” until March 2026. 

With that short, glib statement, he shattered the hopes of thousands of pubs and bars across the sector that had been desperately hoping for some form of help. 

So much for taking back control with Brexit. Twice the EU average is a disgrace and shows the Government remains deaf to the sector’s pleas.

Couple that with the news that the National Living Wage is set to rise from £9.50 an hour for over 23s to £10.42, operators will be facing further increased costs on increased costs as the Government fundamentally failed to grasp the economic reality we are facing.

There was a bright glimmer of hope when it came to business rates, with a nearly £14bn pledge to provide support which would see rates multipliers frozen in 2023 and 2024, along with the extension and expansion on rate reliefs for the hospitality sector to 75% for next year.

That will certainly bring some relief for operators that were braced for the full reinstatement of business rates, something that, for many, might have been the final nail in the coffin.

However, the lack of commitment to longer-term reform of the broken business rates system still appears to be off the table. If pubs and bars are going to be able to trade fairly, the entire system needs root and branch reform, and while relief is welcome, it’s a band-aid over a gaping wound and clearly just kicks the issue down the road.

For many operators, this will feel like they're being handed the crumbs from the Government table.

Business energy rates help also remain confusing with a lack of detail on what will happen beyond April, beyond vague promises for further support next year which is likely to be lower than current offerings.

All in all, not the budget that many would have hoped for, and it remains to be seen whether the business rates relief will be enough to allow businesses to limp into the New Year and keep trading.

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