Not a ‘good news’ budget for hospitality industry

The Scottish hospitality industry should be feeling put out by this year’s inhospitable budget. Beer duty may have been frozen but the minimum wage has been hiked up by 4.9 per cent.

The new minimum wage, effective from April 19 2019, will be £8.21 – that’s an increase of 4.9% and higher than many in the industry had anticipated.

And there are wider implications for the hotels, such as VAT on unfulfilled supplies, which starts on March 19 2019.

This means hoteliers will require to account for VAT on cancellations (previously cancellation charges and deposits retained from guests were not subject to VAT on the basis that there had been no delivery of service).  This will obviously reduce profitability.

Meanwhile The SBPA (Scottish Beer & Pub Association) has welcomed the beer duty freeze as an ‘early Christmas present for Scottish pub-goers and licensees’.

Ahead of the budget, the SBPA warned that the country stood to lose 12% of pubs within the next five years without the Chancellor easing some of the tax burden. Estimates from Britain’s Beer Alliance, produced for the SBPA, showed that if closures continue at the current rate, 561 Scottish pubs will close their doors in the next five years.

The SBPA is now also calling on the Scottish Government to match the support announced for English pubs through business rates relief, which would support 2,415 of Scotland’s community pubs and equate to £11 million per year.

Said Brigid Simmonds, Chief Executive of the Scottish Beer & Pub Association,“Scottish pub-goers and licensees will be toasting the Chancellor following his decision to freeze beer duty. This early Christmas present will save brewers, pubs and pub-goers across the UK £110 million and secure upwards of 3,000 jobs that would have been lost had beer duty gone up

“We are delighted that the Chancellor has listened to our campaign and the seven in 10 people across the country who said they’d like to see beer duty cut or frozen in the Budget. Pubs are so important to their local communities and this is a big step in the right direction for those across the country that are struggling.

“What is important now for Scotland’s pubs is that the Scottish Government now match the business rates relief announced for English pubs yesterday. The new relief will see pubs in England with a RV of under £51k have one-third reduced from their business rates bill. A like-for-like scheme in Scotland would support almost 2500 of Scotland’s smallest, community pubs and be worth £11 million in support.

“With the UK budget showing clear support for pubs, the Cabinet Secretary for Finance must provide, at the very least, the same amount of support to Scotland’s pubs when he announces his budget later in December.”

Charles Ireland, General Manager for Diageo Great Britain, Ireland and France,  was upbeat in his response to the budget. He said, “We are delighted to have a Chancellor who wants to help drinkers of Scotch, Gin, and our hard-pressed pubs. Philip Hammond has listened to the industry and his Scottish colleagues, and today has acted to support our world beating spirits industry.”

 

 

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