The hospitality industry has reacted positively to the latest Budget, hailing it as the first in years to offer tangible relief, particularly through changes to business rates for small firms. However, businesses are urging the government to implement more comprehensive measures to address persistent rising costs impacting the High Street.
The Budget increased the threshold for Small Business Rates Relief from £12,000 to £18,000 for retail, hospitality, and leisure businesses. This change, effective from next April, means approximately 70,000 small businesses, such as cafes, pubs, and salons, will no longer pay business rates if their rateable value is up to £18,000, with a tapering system in place for those above this figure. Additionally, larger businesses in these sectors will benefit from a real-terms freeze on their bills for the next two years, preventing anticipated steep increases.
These measures are to be funded by increased gambling duties and by requiring online marketplaces like Amazon and eBay to ensure sellers on their platforms are compliant with VAT regulations.
Allen Simpson, chief executive of UKHospitality, described the Budget as delivering "positive news for hospitality at all" after previous budgets imposed significant increases in business rates, wages, and National Insurance contributions. Despite the progress, Simpson stressed that "a hill to climb" remains and called for the government to "go further, faster" in addressing the sector's tax burden to stimulate economic growth and job creation.
Ros Morgan, chair of the Real Rates Reform Alliance, echoed this sentiment, stating that while the relief for smaller businesses is welcome, the government is still only making minor adjustments to a system that disadvantages businesses investing in premises and jobs.
Former entrepreneur Hugh Osmond expressed skepticism, suggesting that the rates relief would be insufficient to offset escalating costs for wages, energy, and food.
Pub industry leaders also questioned the extent of the promised support. Nick Mackenzie, chief executive of Greene King, called the Budget a "missed opportunity," arguing that rising employment costs and an increase in beer duty would negate any benefits from a previously announced 20% cut in rates.
The British Retail Consortium (BRC) criticized the business rates announcement as "smoke and mirrors." Chief executive Helen Dickinson pointed out that retailers would still face a 3.5% increase in their bills, which she described as a "body blow" to high streets already grappling with rising costs and vacant units. She emphasized that the majority of employment and rates are associated with larger businesses, not the small firms receiving relief.
Sir Rocco Forte, chairman of Rocco Forte Hotels, also advocated for fundamental reform of business rates to create a level playing field between online retailers and brick-and-mortar businesses, rather than incremental adjustments.