What firms need from the Spring Statement

By Rebecca Weller

- Last updated on GMT

Spring Statement 2024: Hospitality industry calls on Chancellor to secure sector’s future (Credit:Getty/  benedek)
Spring Statement 2024: Hospitality industry calls on Chancellor to secure sector’s future (Credit:Getty/ benedek)

Related tags Legislation Government Finance

Ahead of next month's Spring Statement, The Morning Advertiser has looked at what the sector needs from the Government.

Chancellor Jeremy Hunt will address Parliament on Wednesday 6 March to set out the Government’s fiscal plans for the next 12-months.

Earlier this year UKHospitality (UKH) demanded action from the Government to deliver on its three key priorities for 2024: root-and-brand business rates reform, lower rate of VAT and reformation of the apprenticeship levy.

The trade body said with these changes the sector could generate investment, create more jobs and drive economic growth.

UKH chief executive Kate Nicholls said​: “Hospitality businesses will be hoping this year brings some respite from the endless price rises that have plagued the sector over the past 18 months.

“Government action is needed to bring costs down and allow hospitality businesses to reach their potential.”

Strategically important

Nicholls added the industry was one of the most “strategically important” sectors for the UK, contributing £93bn to the economy, employing 3.5m people and generating £54bn in tax revenues for the Treasury.

“With the potential our sector has for growth, it’s essential we receive the support and investment needed to achieve our goals”, she continued.

Sticking with trade bodies, the British Beer & Pub Association (BBPA) last month said the Spring Statement was a chance for Hunt to “stop the rot”, with figures the association having estimated more than 500 pubs closed their doors for good​ in 2023.

BBPA chief executive Emma McClarkin said: “In any local economy or community, pubs are an economic bellwether and there is an obvious connection between the loss of pubs and the decline of local High Streets.

“We need a path to secure the long-term sustainability for brewers and pubs with a cut to beer duty, a cap to the business rates multiplier and a reduction to the VAT applied for hospitality venues.”

In addition, research from the BBPA revealed a 5% beer duty​ reduction by the Government could help create up to 13,000 jobs across the sector.

The Wine and Spirit Trade Association (WSTA) also joined calls for a duty cut​ in a bid to combat both falling sales volumes and reduced revenue to the Exchequer.

“Recent history has shown cutting excise duty leads to increased sales, keeps price rises down for consumers and brings more revenue into the Exchequer. 

“We are calling on the Chancellor to check the records and take action that will benefit Treasury coffers, British business and consumers – cut duty rates and give everyone a much-needed boost”, WSTA chief executive Miles Beale said.

“It is crucial they prioritise the well-being of people and address the crisis at hand."

Furthermore, with the cost of a pint of draught beer having increased​ 10% year-on-year, according to ONS, trade bodies from across the brewing industry last month launched a campaign​ urging Hunt to increase draught relief to 20%.

In addition, the number of active breweries in the UK fell from 1,828 to 1,815 in the year to January 2023, according to new data released by the Society of Independent Brewers (SIBA).

Though, operators have shared differing views on the Spring Statement.

Banwell House Pub Company managing director Toby Brett told The Morning Advertiser​ a VAT cut would allow businesses to “pay staff more”, while Stroud Brewery founder Greg Pilley urged a duty cut​ would save jobs, benefitting both pubs and brewers.

However, owner of Cheshire Cat Pubs & Inns, Tim Bird,​ felt the sector had asked too much of the Government amid challenging economic headwinds and implored the Chancellor to focus on cutting VAT for hospitality firms.

Additionally, Barons Pub Company managing director Clive Price recently told the Morning Advertiser​ the “crucial role” pubs play in communities was “getting lost” and becoming “undervalued” in discussions of squeezed margins.

The latest figures from the Office for National Statistics, released on Wednesday 14 February, showed inflation rates were unchanged in the year to January 2024, remaining at 4%.

In addition, the Bank of England last month announced interest rates​ would be frozen at 5.25%, with Governor Andrew Bailey stating rates would remain “restrictive” to reach inflationary targets.

Financial relief 

Data from ONS also recently estimated insolvencies across the hospitality sector​ increased by 37% in 2023, with nearly nine premises closing per day​ last year according to data from CGA.

Moreover, close to 23,000 licensed businesses have been lost​ in the past three years, figures from the latest Hospitality Monitor Market from CGA by NIQ revealed.

At the third Night Time Economy Summit, hosted by the NTIA in Manchester earlier this month, industry leaders and mayors from across the country also called for a VAT cut as well as investment into rail and transport services​.

This comes as firms have seen an estimated £4bn in lost revenue due to rail strikes since industrial action began, which has also caused pressure for operators, according to the Night-Time Industries Association (NTIA​).

In light of this, NTIA CEO Michael Kill urged​ the Chancellor and Prime Minister to “acknowledge the critical situation unfolding before them and “take decisive action”.

He continued: “It is crucial they prioritise the well-being of people and address the crisis at hand.

“By implementing a reduction in VAT for hospitality and night-time economy businesses across the board, these establishments will have the financial relief they need to survive."

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