UK Hospitality Industry Reacts to Disappointing Autumn Budget

The UK’s hospitality sector has expressed deep disappointment following the Autumn Budget, which did not include cuts to Value Added Tax (VAT) or changes to National Insurance contributions. The industry, already facing significant challenges, has criticized the government’s failure to provide sufficient support, with some leaders labeling the budget measures as “too little, too late.”

The budget included a slight reduction in business rates for the hospitality sector, but this was quickly dismissed by industry representatives. Karl Mason, spokesperson for the UK Spirits Alliance and director of Masons of Yorkshire, stated that this relief is likely to be offset by an inflation-linked revaluation of rates expected next year. “This is a sad day for the nation’s distillers, pubs, and the wider hospitality sector,” Mason said. He highlighted a worrying statistic: “Three in ten landlords are scared that they will go bust within a year if costs increase; this Budget will push businesses on the brink over the edge.”

The challenges facing the hospitality industry have been exacerbated over the past year due to tax increases and declining consumer confidence. According to data from the Office for National Statistics (ONS), the sector is projected to lose 111,000 jobs by the end of November 2023. In light of this, UK Hospitality had advocated for a VAT reduction, lower National Insurance contributions, and decreased business rates, calls that were largely unmet in the recent budget.

Chris Gamm, CEO of Springboard, emphasized the inadequacy of the proposed measures. He noted that while the business rates relief is welcome, it does not compensate for the rising minimum wage and the freeze on income tax and National Insurance thresholds. “We expect entry-level hospitality roles to decrease and further job losses to follow,” Gamm warned.

The situation has already led to a record number of pub closures, with figures showing the highest number in over two decades. The first ten months of 2023 have seen a five percent increase in closures compared to the previous year, and more than tripling since 2015. Piers Skinner, managing director of the hospitality technology firm Telemetry, remarked, “Today’s budget squeezes the hospitality sector even further, with absolutely no relief provided to support.”

Adding to the industry’s burdens, a proposal introduced earlier this week could allow regional mayors to impose a “modest” tourist tax on visitors staying in hotels, guest houses, and holiday lets. This measure, part of the English Devolution and Community Empowerment Bill currently in Parliament, has drawn sharp criticism from the hospitality sector.

Kate Nicholls, chair of UKHospitality, condemned the government’s decision, claiming it represents a reversal of previous commitments. “The government has gone back on its word and introduced a damaging holiday tax… [it] has blatantly disregarded the commitments it gave to the House of Commons just two months ago that it ‘had no plans’ to introduce this tax,” she stated. Nicholls warned that this tax could cost the public up to £518 million in additional travel expenses in the UK, further straining the hospitality sector.

Critics of the proposed tourist tax fear it will deter travel and worsen conditions for an already struggling industry. “Make no mistake – this cost will be passed directly onto consumers, drive inflation, and undermine the Government’s aim to reduce the cost of living,” Nicholls concluded.

The Autumn Budget has left the UK hospitality sector grappling with uncertainty, as industry leaders call for more meaningful support to ensure survival in these challenging times.