The Chancellor recognised the role that pubs play in society in today’s budget when he announced a reform to alcohol duty and “Draught Relief” on beer sold in pubs, restaurants and hotels.
He cut duty by 5%, the biggest cut in 50 years, and said this heralded a “long-term investment in pubs.” He also “radically simplified” alcohol duty rates by slashing the current number of levels from 15 to 6. Now the stronger the drink the higher the rate. Said Rishi Sunak, “This brings to an end the era of cheap, high strength drinks.” He also said that overtaxed low alcohol drinks will now pay less.
Small innovative craft producers will also small relief on products that have an ABV of less than 8.5% and he brought sparkling wine duty into line with still wine and reduced the amount of duty on fruit ciders bringing them into line with their apple equivalents.
He also, announced a reform to the English rates system, and gave all English hospitality venues a 50% reduction on their rates. A move which the Scottish hospitality industry (which already pays more rates than its English counterparts) has also been lobbying for. However, there was no move to keep VAT at 12.5%.
Responding to the Chancellor’s Budget, UKHospitality’s Chief Executive, Kate Nicholls, today said, “We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the Chancellor’s move today to extend the 50% business rates relief for the hospitality and leisure sector for the next financial year. The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.
“The Chancellor’s announcements simplifying – and in many cases reducing – alcohol duties, are great news for pubs, bars and restaurants, and will benefit all. The Chancellor has shown real innovation and creativity in reforming an archaic system of duty, which we applaud.
“Positive as these announcements are, hospitality remains incredibly fragile, facing myriad critical issues. Rising utility bills, wage bills and food and drink prices have resulted in 13% inflationary costs that businesses are having to absorb at the same time as they navigate severe supply chain issues and chronic staff shortages. Given this toxic cocktail, it is imperative the Government go further to support businesses in our sector.
“The most effective way to achieve this would be to maintain the current lower 12.5% of VAT for the sector. The Chancellor has been bold and radical with alcohol duty – we urge him to adopt the same approach when implementing root and branch reform of business rates, to ensure industries share the burden equally.
“Hospitality has shown this summer that it has the potential to kickstart the nation’s recovery and deliver jobs, growth and investment at pace across all parts of the country but that could grind to a halt next year. It can only lead recovery with the right measures of support in place.”
