Chancellor Rishi Sunak has offered the hospitality sector a 50% discount on business rates for the next year.
He will also introduce “draught relief” which will apply a new lower rate of duty on draught beer and cider. It will particularly benefit community pubs who do 75% of their trade on draught.
Sunak said: “It’s not a freeze, it will cut duty by 5%. A long-term investment in British pubs of £100m a year.” Some commentators have already pointed out that the cut applies to containers over 40 litres whereas most craft brewers don’t keg in anything over 30 litres. Elsewhere, Sunak said small brewers relief will be applied to cider makers and alcohol duty will be simplified so, broadly, the stronger the drink the more duty will be paid.
UKHospitality chief executive Kate Nichols said: ‘“We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the chancellor’s move today to extend the 50% business rates relief for the hospitality and leisure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.”
Miles Beale, chief executive of the Wine & Spirit Trade Association, said: “The decision to freeze wine and spirit duty comes as a huge relief to British businesses, the hospitality sector – including its supply chain – and consumers, giving everyone a much-needed break to help them recover from the pandemic. Chancellor Rishi Sunak should be commended for listening to our calls for support and understanding that punishing tax hikes are not the best way to reinvigorate the sector. By offering continued respite to the UK wine and spirit sector his actions will help save jobs and – in time – replenish revenues to the Treasury through growth in our potential-filled sector. We welcome the reduction of the sparkling wine super tax, which is long overdue. We look forward to seeing the detail of a new system which should remove the existing unfairness of how different products are treated.”
CAMRA chairman Nik Antona said: “The introduction of a Draught Duty Rate is a gamechanger for cask beer drinkers, cider and perry drinkers and the Great British local. This is something CAMRA has campaigned on for many years and we are delighted that the government has listened, supported our locals and introduced the important principle that beer, cider and perry served in a pub or social club should be taxed at a different rate to alcohol bought at places like supermarkets. CAMRA has previously commissioned research that showed that a Draught Beer Duty rate could pull consumption into pubs and social clubs from the off trade, providing a boost to pubs and local economies. We hope that pubs and producers will make sure drinkers see the impact of this revolutionary policy on the price of their pints, to encourage them to return to their locals. We look forward to campaigning for future reductions in Draught Duty, to make sure that consumers, brewers and publicans can enjoy the maximum benefits of this ground-breaking new policy.”
