Cautiously Positive Industry Reaction To The Chancellor’s Budget

Chancellor Rishi Sundak’s budget earlier today has been cautiously but warmly welcomed by the hospitality and licensed on trade.

The Chancellor confirmed that the business rates holiday and the VAT cut will be extended, but not for a full year which the industry had been calling for.

The 100% business rates holiday will be extended into the first three months of this financial year, through to the end of June, and for the remaining nine months will be discounted by two-thirds up to a value of £2m, with a lower cap for businesses who have been able to remain open.

The 5% reduced rate of VAT the Chancellor brought in for the hospitality sector and the pandemic first broke will be extended for six months to 30 September with an interim rate of 12.5% for another six months after that, returning to 20% in April 2022.

The Chancellor also announced a freeze on wine and spirit duty, and the Bounceback and Coronavirus Business Interruption Loan schemes will be replaced with a new recovery loan scheme, with businesses of any size able to apply for loans from £25,000 up to £10m through to the end of this year. The government will provide a guarantee to lenders of up to 80%.

In 2023, the rate of corporation tax, paid on company profits, will increase to 25%, however it this will be kept at 19% for businesses with profits of £50,000 or less. The government will also introduce a taper so businesses only start paying the full rate on profits from £250,000.

The decision by Rishi Sunak MP to freeze alcohol duty could not have come at a better time for the UK wine and spirit industry says the Wine & Spirit Trade Association,


Miles Beale Chief Executive of the Wine & Spirit Trade Association, said:

“The decision to freeze wine and spirit duty comes as a huge relief for British businesses, pubs, restaurants and its suppliers following the crushing – and continuing – closure of the hospitality sector, for months on end, during the pandemic.

Chancellor Rishi Sunak seems to “get it”. He understands that supporting our industry will allow it to recover, rebuild, create jobs and – in time – replenish revenues to the Treasury.  He has also shown he is in touch with men and women from all walks of life who want to enjoy their chosen tipple without getting stung by further tax hikes.

We will all raise a glass to the Chancellor tonight – and look forward to more permanent support for the sector following the review of alcohol taxation.”

Recent HMRC figures show the number of distilleries registered in 2020 shot up to over 560 as the UK boosted its distillery numbers by a record breaking 124 last year, doubling the number of UK distilleries in four years.


Miles Beale, added: “We also welcome the extension to the VAT cut for the hospitality sector, but it is disappointing that the Chancellor did not extend this to include alcoholic drinks, which would have given the trade a real boost when they are finally allowed to re-open their doors to the public.”


Steven Alton, BII CEO commented: “With the package of support from Government laid out, our pubs can begin to look to the future of their businesses once more. The extension of furlough to September will help our pubs to manage the return of their teams until they are able to trade freely again. The confirmation of further reductions in Business Rates will allow them time to recover, but until our nation’s pubs are able to return to normal trading, the vast majority of these businesses will still be loss making.

“The extension of the VAT cut is welcomed, helping food businesses through the summer, however for our community wet-led pubs, the benefit will be extremely limited and they will not be able to trade profitably until all restrictions are removed.

“The news on further grants is positive, but in no way covers the basic running costs of our closed pubs or compensates them for the lost income over the last 12 months. For many of our members, these grants will not even cover the furlough contributions that will be needed to safeguard their teams until May, let alone June.

“The support announced gives our sector an opportunity to rebuild as they reopen in line with the Government roadmap, however, any changes to their plan will need to be matched with appropriate support measures.

“I have no doubt that customers will return to their local pubs at the earliest opportunity and once again be given a fantastic hospitality experience. Our members have shown throughout this crisis their commitment to their local communities, and their ability to keep customers and staff safe. They will need all of our support over the coming weeks and months, as we all return to the Great British pub.”


Joss Croft, CEO, UKinbound said – “The extension of furlough is very welcome news for our industry, as is the business rates holiday and its further cut. We’re also pleased that leisure grants of up to £18k will be available for businesses that need to stay closed for longer, but we urgently need confirmation from Government that tour operators, coach operators, language schools and event organisers will be eligible for these grants, having been unfairly excluded to date.

“It was however disappointing and a huge missed opportunity to hear that sector-specific support, which has been rolled out in Scotland, will not be provided. The VAT cut will be beneficial to hospitality and domestic tourism businesses, but its impact on inbound tourism, and the export value it delivers that will take longer to restart, will be minimal.

“The inbound tourism industry still has a long road to recovery and the Government needs to recognise this. International inbound tourism to the UK can play a crucial role in supporting the country’s economic recovery, and it’s levelling-up and Global Britain agenda, but this will only be possible when it’s safe to travel again. Until then we need Government to continue its dialogue with the industry and understand that further support is urgently required.”


Dr Nicola M Headlam, incoming Head of Public Sector at Red Flag Alert, said: “Pledging hundreds of millions to revitalise the hospitality, retail and cultural sectors is a step in the right direction but risks being short lived. Furlough and lockdown have had huge, and potentially long lasting, impacts on how people use city centres, high streets and business districts, meaning that a data-heavy response to the economic crisis must be at the cornerstone of the recovery. This will inform successful economic and industrial strategy and urban planning that is more likely to achieve the Government’s aspirations to level up the UK.”

Robert Hayton, U.K. President of Property Tax at Altus Group, Britain’s largest ratings advisory, says “the Chancellor has struck a decent balance with the roadmap out of restrictions and the overall basket of support” adding “after the 3 month exemption period, the caps on the value of rates relief available makes the support targeted, a key ask, whilst the lower level of discount once all restrictions are removed, still supports those sectors most impacted by the pandemic in the longer term. Both of those measures together deliver the best value for taxpayers but must be kept under constant review.”


CAMRA’s National Chairman Nik Antona said:  “Freezing alcohol duty is obviously better than a rise. However, CAMRA had hoped to see the Chancellor announce a cut in duty on beer served on tap in pubs and social clubs to benefit consumers and help the great British pub recover and thrive in the difficult months and years ahead by being able to compete with supermarket alcohol.

“The Government’s commitment to review alcohol duties in the coming months is welcome. CAMRA will continue to call for a lower rate of duty for beer served in pubs – an option available to the Government now we have left the European Union.

“Reducing tax on beer served in pubs and social clubs would encourage responsible drinking in a supervised, community setting – as well as boosting jobs and local economies, helping consumers and benefiting pubs and licensees.”

On financial support announced, Nik commented: Cutting VAT as pubs begin to reopen, and reducing it until April next year, means they can now start benefiting from that cut – but CAMRA believes this VAT cut should be extended to alcohol so that traditional locals that don’t serve food can benefit too.

“The extension of furlough until September and new grants of up to £18,000 are very welcome. However, pubs are unlikely to be able to fully reopen at pre-COVID trading levels due to outside space and then table service only indoors restrictions. The beer and pubs sector will need further support over the coming months, over and above new loans, to help them get back on their feet until there is a full and proper re-opening and they can trade at full capacity.

“Extending the business rates holiday until the end of June will help keep the wolves from the door for many English pubs, with the two-thirds reduction for the rest of the financial year a welcome step. However, given how tough it will be for many pubs we believe the 100% cut in business rates needs to be extended for a full 12 months as has already happened in Scotland.”

UKHospitality Chief Executive Kate Nicholls said: “The Chancellor has listened to the concerns of the hospitality sector. Details are yet to be pored over but it looks like crucial support will help businesses at a critical time.

“The Chancellor has announced support to help our sector get back up and running, now it is vital that the Government sticks to its date of June 21st for a full reopening of the sector. Delay would see more businesses fail, more jobs lost and undo much of the good work the Chancellor has done todate.”


“An extension of the 5% VAT rate was absolutely crucial for hospitality businesses. Confirmation that the Government will provide support for a full year will bring peace of mind to the sector. UKHospitality has been pushing hard for this and it was critical that it was delivered today.

“While it would have been better to have extended the 5% rate further, it is now vital that the Government looks at introducing the interim rate for hospitality on a permanent basis. It would be a positive legacy of an otherwise dreadful year for our sector. A permanent reduced rate of VAT for hospitality would redress the unfair tax imbalance that our businesses have faced for too long and make us internationally competitive.”

On business rates:

“It is great that this fixed cost has been eliminated during the recovery and is heavily reduced for the rest of the financial year. It will give some much-needed breathing room for businesses as they prepare to reopen, though the cap will impact some larger businesses. Not all businesses will be able to reopen swiftly, it will take them time to get up and running. They will be burning through meagre cash reserves as they do so, so this extra flexibility is going to crucial in ensuring as many as possible stay alive.

“The forthcoming revamp of the rates system then has to deliver a wholly new system of business tax that no longer unfairly penalises our sector.”

On grants:

“The previously announced grants are a welcome boost. The priority now is making sure that these grants find their way to the businesses that need them as quickly as possible and that interest rates are capped. It is critical that Government makes clear that EU State Aid rules do not apply to these grants.”

On furlough:

“The extension of the scheme brings stability and peace of mind to employees after a dreadful year of uncertainty. There is still a worry that it will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet, though.”

On duty:

“Scrapping any increase on the rate of alcohol duty is a pragmatic step. Additional costs were the last thing that businesses needed at the minute. As we emerge from the crisis, we hope that the Government will seriously consider a separate rate, long pushed for by this sector, for on-trade alcohol.”

On the recruitment bonus:

“Increasing the recruitment incentive will be a major boost in helping the hospitality sector rebuild once the crisis has passed. The doubling of the apprenticeship incentive will be a major boost for our sector’s recovery and aids our commitment to upskilling people across the country. Driving the economic recovery of the UK will be dependent on getting people back into work and this will be a huge help. The hospitality sector is going to be a key weapon in the country’s arsenal if it wants to rebuild the economy and tackle unemployment.”

On investment relief:

“The commitment to encourage investment, with 130% tax reliefs, is very encouraging as we re-build and re-generate high streets and local communities.”

On rents:

“The biggest gap in support remains the outstanding sector rent debt. We need the Government to announce an extension of the moratoria at the earliest opportunity and work with industry to establish a landing zone to resolve this £2bn millstone around our recovery.”


Emma McClarkin, Chief Executive of British Beer & Pub Association, said: “We welcome the Chancellor’s announcement of continued support for the devastated pub sector in the form of additional grants, as well as extensions to the job retention scheme, 5% hospitality VAT rate and business rates holiday.

“The new grants are worth £400 million for pubs and will go some way in helping many of them survive through to the time when they can reopen and operate viably. It is, however, crucial that the Government ensures all pubs benefit, including those that are part of a group, by removing the current State Aid cap.

“The extension of the job retention scheme until September will help save thousands of pub jobs. Worth £700 million to our pubs and brewers, it gives the sector time to reopen and rebuild trade before bringing all staff back, which would otherwise be too costly and unviable whilst still facing trading restrictions until end of June.

“It is imperative that the Government allows pubs to operate without restrictions as planned from 21st June. This will give them the best chance to get back on their feet and serve their communities.

“Extending the 5% VAT hospitality rate until September and at 12.5% thereafter is most welcome. We calculate it is worth £485 million to pubs. With all pubs having been closed for so long, the lower VAT rate has been of limited benefit so far, tens of thousands of pubs will not benefit from this until they reopen on 17th May at the earliest and then still at reduced capacity. However, wet led pubs will be especially disappointed again that the reduction will not apply to all beverages so they too can benefit from this.

“Overall, this is a good Budget for pubs and breweries in the short term, reflecting just how vital they are to the social, cultural and economic fabric of our communities.

“However, this is just the start of the journey on the hard road to long-term recovery for our sector. The Chancellor has made it clear today he recognises the vital role local pubs play in their communities. Now he must continue that commitment by ensuring Britain’s pubs and breweries are supported in the long term. This should start by extending the VAT cut on hospitality to all drinks until at least the end of the year. We also need a fundamental reform of VAT, business rates and beer duty to ensure that the thousands of pubs and breweries across the UK can thrive and help drive the social and economic recovery we urgently need.”


Lawson Mountstevens, Managing Director, Star Pubs & Bars, HEINEKEN UK, said “We welcome the package of support for hospitality announced in today’s budget including the freeze in beer duty. Continuing the 5% VAT rate until September and further business rates relief together with the new Restart

Grant scheme provides a much-needed lifeline to an industry on its knees. We’ve done all that we can to help our licensees through the pandemic – investing nearly £50 million in rent reductions. It is good to see the Chancellor step up and provide additional support for pubs who are the beating hearts of their communities the length and breadth of the UK, and we hope today’s announcement paves the way for future alcohol duty and business rates reform to help our sector longer-term.”


Patrick Fawley of the East London Pub Co. runs five pubs and bars in central London said: “Businesses need to be propped up properly so that they can restart and create meaningful and long term employment. I am relieved by the news of the extension of the reduced local authority rates and very much welcome that VAT remains low.   Whilst the Restart grants are beneficial, they pale into insignificance when offset against the huge losses of the last 12 months. The public perception is that business owners have loads of support through the furlough scheme, but in reality the level of business support to owner operators is far less than in Ireland or France.

“The extension of the furlough scheme is welcome but it is a sticking plaster. The furlough system needs reviewing so employers can take on staff confident in the knowledge that they’ll be supported if another lockdown happens. We’d like to open three more pubs this year, but we need this reassurance. We opened a pub in Soho just before the first lockdown but because it had only been open a couple of weeks the 51 new employees weren’t eligible for furlough, which was devastating for them.

“Local Authorities also need to do their bit and work with local businesses to support and create jobs. We’re currently in negotiation with Tower Hamlets to takeover a carpark to create outdoor space next to our Spitalsfield pub, The Gun, but engagement is poor and they want to charge an exorbitant amount. We all need to work together to revive the economy.”


Jackie Fairburn, The Hare & Hounds, West Ardsley, Yorkshire said: “Any help is gratefully received. The new Restart Grant scheme and the VAT and business rate relief extensions are really welcome and will definitely help in the coming months, especially as the hospitality industry has been unfairly floored by covid restrictions. I am lucky as I am a tenant and so have had rent support from my pub company, but even with that I am haemorrhaging money. I simply don’t know how others without that support are coping. I also have a large garden and so can focus on reopening outdoors on 12th April. I will get through this but sadly many others won’t.”