Expert Insight
NEWS from
Kate Nicholls UKHospitality Chief Executive
Now that the hoo-hah and hullaballoo caused by the recent ‘mini-Budget’ has (somewhat) abated, it’s a good time to take a rather more dispassionate look at what Chancellor Kwasi Kwarteng’s ‘fiscal event’ really means for the hospitality sector.
The stated objectives of boosting growth and tackling inflation encouragingly and quite rightly put business at the heart of the Government’s agenda, but the measures contained in the mini-Budget will obviously take time to have any meaningful effect.
Yes, the Chancellor committed to making the UK a globally competitive tax regime, yet overlooked what to us as an industry appear two very obvious levers to achieve that: a lower VAT rate for hospitality and business rates relief. The latter, of course, will require an overhaul of what is frankly an unfair system, and which, along with VAT at 20%, is acting as a powerful brake on the recovery of our sector.
So with a VAT rate that’s the highest in Europe, and starkly at odds with ambitions for global tax competitiveness, we’re urging the Chancellor to address it in his autumn Budget, in November, if not before.
While the tax-free shopping for overseas customers announced in the mini-Budget is a welcome move to tempt overseas tourists back to the UK (a motive spurred further by a relatively weak pound), a more
immediately effective and wider reaching step would be to – you’ve guessed it – reduce VAT for our domestic customers.
Because along with an equitable alternative to business rates, a lower VAT rate for hospitality would help businesses keep prices down for customers, with an added benefit for government efforts to stifle inflation. If our venues are forced to raise prices for much longer, hundreds of businesses and thousands of jobs stand to be lost.
Kwasi Kwarteng’s confirmation of the energy price support for businesses, along with the National Insurance Contribution 1.25 percentage points reverse, will allow operators businesses to draw up improved plans for survival. They must survive if our industry is to fulfil its potential as one of the sectors best placed to drag the economy back to pre-pandemic levels.
But while the positive measures announced in the mini-Budget will undoubtedly bear fruit in due course, more support for our sector is urgently needed if struggling businesses are to make it even as far as the New Year, because without it, a bleak winter beckons.
So UKHospitality’s work continues; urging government and the Chancellor to deliver a VAT rate reduction and a fairer business rates regime which, together, would do so much to improve the financial outlook for so many hospitality businesses.
Roll on, then, the autumn Budget (whenever that might be, though 23 November now looks likely). What a wonderful early Christmas present a lower VAT rate would be. It might be too much to ask for business rates reform at the same time, but here’s hoping that our constant urging has been listened to.
6
October 2022
www.venue-insight.com
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