Industry leaders had been calling for a cut in VAT to help the struggling sector, which has been hit by hikes in energy and ingredient prices as well as staffing costs and a fall in consumer spending.
Rare Restaurants CEO Martin Williams branded the Chancellor’s announcement “an empty Budget in terms of both ideas and support for the hospitality sector”.
“Today’s Budget was the last chance for the Conservatives to support the hospitality sector for the first time since the pandemic, by listening to over 100 hospitality leaders and reducing VAT in Restaurants to 12.5% and capping business rates increases.”
“Sadly Chancellor Hunt, has once again ignored our sector which employs over 3 million people and is an important part of our society and offered no meaningful support.”
Ahead of the Budget, Rare Restaurants’ Gaucho restaurant chain announced that it would take the VAT off all lunch bills every Friday until the end of the month.
Taking to social media site X, Loungers co-founder Alex Reilley said in response to Hunt’s Budget: “This current government has to be the most anti-business Tory administration in history.”
Business rate hike
Following the budget announcement commercial real estate intelligence firm Altus Group highlighted that 219,410 premises in England now face a business rates tax hike of £1.66b on 1st April for the 2024/25 financial year.
“The 6.7% increase, at an effective tax rate of 54.6%, will mean that in April firms will face the biggest year-on-year increase to the standard multiplier since 1991 despite the UK’s headline rate of inflation set to fall below the target rate of 2% within the coming months,” says Alex Probyn, president of property tax at Altus Group.
“This is no way to encourage investment and foster economic growth especially after two consecutive quarters of contracting GDP.”
Isabelle Shepherd, director in the hospitality team at accountancy firm haysmacintyre, welcomes the Government’s freeze on alcohol duty but says that the budget provided “cold comfort” for the hospitality sector, which needed urgent support to prevent further closures in the near future.
“In every other respect, today’s budget will be cold comfort for the sector, which has seen hospitality businesses of all sizes facing a constant battle on multiple fronts since the pandemic,” she says.
“And now, with operating costs at an all-time high, and Government support having dropped off post-Covid, hospitality has been left out in the cold by the Chancellor’s budget.
“Add to this the sector’s challenges with recruitment it is hardly surprising that businesses are buckling under the pressure. Hospitality urgently requires the Government to step in to reduce the VAT and business rates burden; or else we’ll see even more casualties in the coming months. Unfortunately, we’re still waiting on that support following the budget.”
No tax-free shopping schemes
Travel trade associations criticised Hunt for his unwillingness to implement a tax-free shopping scheme for visitors to the UK.
“We applaud the cut in national insurance and freezing of fuel and alcohol duty, which will positively impact many that work in the UK’s tourism industry, but the absence of a new fiscally positive tax-free shopping scheme is a huge missed opportunity, that would stimulate growth and bring massive and much needed additional export revenue to the UK,” says UKinbound CEO Joss Croft.
“This is a shame as international tourism is incredibly competitive, and with the right policies this industry can quickly deliver incredible growth for UK plc in the short and long term.”