After almost two thirds of The Morning Advertiser readers (62.5%) said their biggest wish was to see a cut in VAT from its current 20% level but this did not happen even after a mega campaign launched by celebrity gastropub operator Tom Kerridge earlier this year.
Despite Chancellor John Healey announcing a Budget that will be viewed as being domestically friendly – including £100 of energy payment support for 20m households – the on-trade has been somewhat left out on a limb once again.
We have a hill to climb: today was a first step towards fairness, and we have to be clear that there is a lot more to do.
UKHospitality CEO Allen Simpson
Campaigning works
UKHospitality CEO Allen Simpson said this is the first Budget in several years to deliver any positive news for hospitality and “it shows that forceful, sustained sectoral campaigning works” and “we must carry on going to win the VAT cut we so badly need”.
“Hospitality pays 82p in business taxes for every pound it makes – the highest in the economy and double that of a bank,” Simpson added. “We were clear this Budget had to reduce that burden. There will be no solution to the NEETs (not in education, employment or training) crisis without doing it.
“The change to hospitality business rates across England is important. For hospitality and leisure businesses across England, rates will either be frozen in real terms, reduced or cut to zero for two years from April. That is meaningful progress.
“But we have a hill to climb: today was a first step towards fairness, and we have to be clear that there is a lot more to do.
“While we are encouraged that we have a Government that is now listening, we urge them to go further, faster, to address the unequal tax burden on the sector, and to help us unlock investment, deliver on their commitment to create jobs for young people, and growth for this industry and the economy.”
Very welcome step
Meanwhile, British Beer & Pub Association CEO Emma McClarkin said the confirmation of lower business rates for the next two years and an increase in the tax-free thresholds for smaller pubs and high street businesses is something the group has worked with the Government on, so this announcement is a very welcome step in supporting pubs.
“However, when the entire brewing sector is united on calls to lower the cost of doing business, to have a rise in beer duty is troubling as it will undoubtedly push up the price of a pint,” she said. “And despite our calls to cut red tape, the introduction of yet more regulation for pub companies is disappointing.
“As the Prime Minister has acknowledged, there is much more to do to back our great British pubs and pints and we support this ambition. While many were hoping for more today, the expectation to deliver more remains.
“We will continue to work with Government to transform the opportunities for brewers and publicans, create incentives to employ more young people, keep pints affordable and ensure our locals remain at the heart of our communities.”
The right to a guest beer will permit landlords in large pub company pubs in England and Wales to sell what customers want.
SIBA CEO Andy Slee
Better choice at the bar
A definite bright spot in the Budget was Healey’s pledge to give £10m relief for small brewers.
Society of Independent Brewers & Associates (SIBA) CEO Andy Slee said fans of indie beer will be toasting the Chancellor’s big pledge for small breweries tonight after the vow to expanding access to pubs and improving the generosity of small producer relief.
“This relief is used by small independent breweries to invest in their businesses, expand and compete against the global brewers that dominate the sector and today’s announcement will give them a vital boost,” Slee explained.
“Pubgoers will have a better choice of beers at the bar, including those from local independent breweries. The right to a guest beer will permit landlords in large pub company pubs in England and Wales to sell what customers want, which is a great-tasting local beer.
“Accessing the local pubs has been a barrier to growth for independent brewers who say they can’t sell to around 62% of the pubs in their local communities because of restrict market access. This is despite 80% of beer drinkers wanting to see local beers on the bar.”
Slee said this new right to a guest beer and the extra relief support will hopefully supercharge this revolution, helping them to grow and thrive.
He welcomed the “positive changes to Small Producer Relief as it applies to lower strength beer” and added small breweries were previously largely locked out of the growing market for lower strength beers because of a quirk of the alcohol duty system. Therefore, improving Small Producer Relief for them too will enable brewers to respond to changing tastes and produce more lower strength beers that don’t compromise on flavour.
Difficult circumstances for Chancellor
Night-Time Industries Association (NTIA) CEO Michael Kill said the trade body was never under any illusion the Autumn Budget would resolve the deep-rooted challenges facing the night-time economy.
He continued: “The damage accumulated over many years cannot be reversed through a single fiscal statement and we recognise the difficult economic circumstances in which the Chancellor is operating.
“There is a clear attempt to balance immediate pressures with a longer-term strategy for growth, investment and structural reform, which we recognise.
“Importantly, the Government has listened to industry concerns around gambling taxation and support for small and medium-sized businesses, recognising the importance of protecting our high streets and limiting further financial harm.”
Kill added the measures surrounding business rates relief for pubs, clubs and music venues, increased small business rate relief thresholds, energy costs, youth employment, apprenticeships and access to finance demonstrate some recognition of the pressures facing businesses.
“However, their impact across the wider night-time economy is likely to be limited. With around 70% of our sector made up of SMEs, the detail underpinning these announcements will be critical in determining who benefits, the scale of financial relief and whether these measures meaningfully address the pressures operators face.
“More importantly, the Chancellor has not gone far enough on the bigger opportunities to alleviate the tax burden across the broader nightlife and hospitality sector. Meaningful reductions in VAT and employer national insurance contributions could have provided immediate relief, supported employment, stimulated demand and created the financial headroom businesses desperately need to invest and grow.”
He concluded: “This Budget may provide some breathing space but the real test will be whether it prevents further business losses and creates the conditions for recovery. One Budget cannot undo years of damage. What we need now is immediate action alongside long-term reform, giving businesses the confidence and financial capacity to survive, invest and grow again.”
At a time when many pubgoers, pubs and brewers are struggling to make ends meet, increasing taxes on pints in pubs is the wrong decision.
CAMRA chairman Ash Corbett-Collins
Opportunity for independent brewers
The Campaign for Real Ale (CAMRA) chairman Ash Corbett-Collins had mixed feelings on the Budget statement, welcoming new measures aimed at small pubs, independent brewers and cider makers, but added the wider picture on beer tax, VAT and energy costs will disappoint many drinkers, pub and beer businesses.
On guest beer rights, Corbett-Collins said: “The announcement in the Chancellor’s ‘Red Book’ that tied pub tenants in England and Wales will be allowed to serve a guest beer of their choice is incredibly welcome.
“This could, if introduced properly, help independent brewers get more of their beers onto bars.”
However, he said the Government needs to go further by making changes to make sure “we can get decent beers from independent British and Irish brewers in all pubs instead of the same, bland beers from multinational brewing businesses that dominate at the bar”.
On draught alcohol duties rising, he explained: “Drinkers will be disappointed to see a beer tax rise. The Chancellor could and should have cut tax specifically on beer and cider served in pubs, and hiked duty on cheap supermarket alcohol to help level the playing field.
“At a time when many pubgoers, pubs and brewers are struggling to make ends meet, increasing taxes on pints in pubs is the wrong decision.”
Corbett-Collins described the £10m alcohol duty relief scheme for smaller brewers and cider makers as “great news”.
He said: “Small and independent brewers are making the highest quality, most innovative, cask beers that the UK has the offer, but they’re squeezed out of the market by the global drinks manufacturers that control bars and flood them with bland beers.”
While on the lack of measures taken on VAT, energy bills and employment taxes, he said beer and pub businesses were “crying out” for a cut in VAT on food and alcohol, as well as action on “sky-high” energy bills and increased employer national insurance contributions, adding that by not acting upon these issues, more otherwise viable pubs will be calling last orders for good.
Alcohol tax hikes will stifle business
On retail prices index (RPI) alcohol duty hikes, which are due to come into effect on 1 February 2027, Wine & Spirit Trade Association CEO Miles Beale said: “No one will be toasting yet another RPI increase on top of rising inflation.
“Instead of providing breathing space in a cost-of-living crisis, the Chancellor’s alcohol tax hikes will further stifle British business and serve up nothing for consumers.
“Increasing alcohol duty is not boosting Treasury funds but it is closing down businesses and pricing consumers out of a bit of joy in their shopping basket.”
UK Spirits Alliance spokesperson and owner and director at Spirit of Manchester Distillery Jen Heeley-Wiggins said: “This is a sad day for the nation’s distillers, pubs and the wider hospitality sector.
“Innovative, world-leading distillers are disappearing from communities across the UK. This Budget will push businesses on the brink over the edge.
“For all that pain, there’s no gain for the Chancellor. Receipts were down by almost £100m last year alone. Today’s decision will also be felt in the pockets of the working people that this Government says it wants to support.”
Scottish Licensed Trade Association (SLTA) managing director Colin Wilkinson said there isn’t much to celebrate for the licensed hospitality trade in Scotland and will have to wait to see if the Scottish government, through Barnett consequentials, makes its own decisions on changes to commercial rates support for the sector in the Scottish Budget on 3 December. This will be by increasing the small business rate relief threshold, announced by the Chancellor today.
“A VAT reduction for hospitality didn’t even get a mention,” he added. “The lack of an announcement that there would be a reduction in VAT for hospitality businesses was predictable and disappointing in equal measure.”
He added the rise in the NLW and NMW and the consequential higher employers’ national insurance contribution costs are “the last thing employers need without any mitigation to cover the increases”.
Wilkinson concluded: “The licensed hospitality sector employs a lot of young people and would employ more but these increases will not only jeopardise job creation but also put current jobs at risk.
“Reduced alcohol duty for small British breweries and cider makers is to be welcomed too – but does little to help the overall drinks industry. The Chancellor, however, kept rather quiet on the fact that alcohol duty rates would still rise in line with inflation from February 1 next year.”
