While Chancellor Jeremy Hunt’s Autumn statement has brought welcome relief to the sector the Chancellor has yet again failed to support the High Street through his business rates policy, industry leaders have said.
The Chancellor announced he would support smaller businesses by:
- Freezing the multiplier for another year (currently 49.9p for small businesses).
- Extending the 1-year 75% discount on business rates bills up to £110,000 per business.
However, nothing was said to support the larger retail and hospitality businesses who will still see an eyewatering 6.62% rise on their business rates bills next April.
John Webber Head of Business Rates at Colliers commented, “ By adding the CPI inflation figure to the existing multiplier he has grabbed even more cash from hard pressed retailers. For these businesses, the multiplier will be 0.546 – meaning business rates is heading towards being a 60% tax!”
“The Chancellor’s actions will be a massive hit to the high street. Although most businesses in the retail and hospitality sectors have benefited to some extent from the 2023 Revaluation, the sectors are still under pressure facing higher occupational costs across the board as energy, employment and insurance costs soar- yesterday’s rise in the national living wage only adds to the pressure.”
Webber continued, “In his rush to save his job, the Chancellor has ignored the calls of the BRC and UK Hospitality and seems to have forgotten that the larger retailer and hospitality companies are the main employers in their sectors. Hitting them with a 6.62% rise in their rates bills next April will have a dire impact and certainly dampen expansion and growth plans. For some businesses it might be the last straw. The situation is even more bizarre when we see the current inflation figure has already fallen to 4.6% and may be around 3% next April, but we would see such businesses tied to the 6.62% figure for the year.”
“The Chancellor’s failure to support those retailers and hospitality companies with multiple stores or outlets, will lead to a hardship and do nothing to stem the trail of bankruptcies we have seen from such chains in recent years from Toys r Us and Carluccio to most recently Wilko. Last year 67,000 retail workers lost their jobs and 5,5000 retail stores shut shop. The lack of support is astounding.” “ It’s pointless worrying about Capital Allowance benefits on empty shops” says Webber.
Webber continues, “Aside from freezing the multiplier for small businesses, the government has also yet again failed to fulfil its election manifesto and introduce proper business rates reform. None of the following matters, that we have been campaigning for have been addressed:
- Reduce The Multiplier (the UBR used to calculate rate bills) to around 34 p in the £.
- Reform of the Sticking Plaster Reliefs System and Remove Business Rates Deserts, where no business rates are paid
- Extend Empty Property Rates Relief to Twelve Months and to Other Sectors
- Introduce Annual Revaluations
- Review Rating of Plant and Machinery
- Improve Transparency from the VOA
- Reform Unfriendly and Ill-Equipped Appeal System
- Address Rogue Rating Advisors by Regulating the Ratings Industry
He added “The Chancellor spoke of creating a tax regime pro-business and designed for further “levelling up”. The failure to freeze the larger multiplier fundamentally means substantial business rates rises for the UK’s biggest businesses from 2024. Nowhere else in Europe do businesses pay approaching 60% the rental of their premises in property taxes and at current levels this is unsustainable and deters new investment in businesses, despite the Chancellor’s claims.
This is a damning indictment for the Conservative Government who have failed their manifesto promise to reduce this tax.”
Colin Wilkinson, managing director, SLTA (Scottish Licensed Trade Association), said: “We welcome the news that our alcohol duty has been frozen – this comes as a relief for pubs and the wider hospitality industry north of the Border.
“However, the key takeaway from Jeremy Hunt’s statement yesterday – the extension of 75% business rates relief for hospitality and retail in England for another year – sends a vital message to the Scottish Government that this should be replicated in Scotland.
“Implementing this measure in next month’s Scottish Budget would send a clear message from the Scottish Government that it understands our sector contributes to building a strong economy but there is no doubt that businesses in cities, towns and villages across Scotland need support if they are to be part of efforts to rejuvenate communities, boost economic growth and create jobs.
“We were also disappointed that the Chancellor ignored pleas from the SLTA and other industry groups for a VAT reduction for the hospitality sector. This was a great help to businesses during the pandemic and to reduce VAT again now – at time when so many businesses are struggling with rising utilities and other costs – would bring a real benefit to the sector.
“Recruiting staff continues to be a major barrier to growth for much of the hospitality industry and it is crucial that we see more flexibility in immigration and measures put in place to allow asylum seekers to work. And with the National Living Wage increasing next April from £10.42 to £11.44, it would have been good to see the Chancellor give us something to mitigate this increase and other increased costs currently facing businesses.”
Chris Maloney, Business Advisory Partner and Head of the Hospitality & Leisure team at Menzies LLP said: “At a time when hospitality sector business insolvencies are rising at a rate of 66% year on year, there were high expectations for yesterday’s Autumn Statement. However, while there were some positive signs, the overall impression that was much more could have been announced to support our sector and that it failed to address some key concerns.”
“It is super news to hear that the Hospitality and Leisure Business Rates Relief scheme will be extended for a further year at 75%, saving the average independent venue over £12,800 next year. At a cost of £4.3 billion, this is a significant tax cut which recognises the role of hospitality and leisure venues in our communities.”
Giles Fuchs, Owner of the Burgh Island Hotel comments: “The calls for Government action on business rates relief have been answered in the Chancellor’s Autumn Statement, a welcome decision for the 60% of hospitality operators across the UK who viewed it as a top priority.”
“The existing 75% rate relief has been extended a further year, which will cost £4.3 billion, but it is a much-needed measure for a sector that has been hard-hit in recent years. While a positive move, more needs to be done. The current standard business rates multiplier of 51% need addressing as it will rise with inflation. Additionally, the burden of property tax in the UK, which at 4% of GDP makes it the highest in OECD economies, is discouraging needed investment across property-related sectors, including hospitality.”
“Hospitality is integral to the cultural and social fabric of the UK, and even more importantly to the economy, with the tourism industry contributing l some 214bn to the UK’s GDP annually so we need to ensure it continues to be supported.”
Nick Mackenzie, CEO at Greene King, said: “The Chancellor’s decision to freeze alcohol duty is a welcome lifeline for many pubs and breweries. The extension to the Retail, Leisure and Hospitality business rates relief scheme, and freezing the small business rates multiplier, are also both welcome and will help provide vital respite to our tenanted pubs who are struggling with high costs in other areas. However, these will offer little support to businesses like Greene King that manage and invest in pubs in communities.”
“Pubs play a huge role in contributing to the nation’s growth and employ hundreds of thousands of people across the UK. We’ve invested heavily in our pubs and the long-term future of our sector, but at the same time we’ve seen the cost of doing business continue to rise. We continue to invest in our brilliant teams across the UK but must recognise that the 10% rise in the National Living Wage will add extra pressure on pub operators across the country. We urge the Chancellor to continue to explore ways to reduce the costs facing all pubs, so the sector can help unlock the growth he is seeking.”