After a year and a half of difficulty, English pubs will be raising a toast to the Chancellor today after he slashed business rates and simplified alcohol duty in a bid to encourage punters back to pubs.
A total of 358,254 hospitality, retail and leisure premises in England have received £17.16billion in rates relief since the onset of the pandemic, according to Atlus Group.
The measures were due to come to an end next year but Rishi Sunak today announced a one-year 50 per cent cut, worth £1.7billion.
Pubs have welcomed Chancellor Rishi Sunak’s overhaul of the alcohol duty system
Elsewhere, pubs will be welcoming the ‘game changer’ reforms to alcohol duty which will see a new, lower rate of duty on draught beer and cider.
Despite a raft of support measures, the industry is still reeling from the impact of lockdowns and are calling on the Chancellor to do more.
Alcohol duty reforms a ‘game changer’
The tee-total Chancellor spent considerable time outlining a complete overhaul of alcohol duty with tax cuts on some drinks.
The new rules, which will come into effect in 2023, are a ‘radical simplification’ of the UK’s system of alcohol duty, which Sunak described as ‘outdated, complex and full of historical anomalies’.
We will be raising a toast to the Chancellor for his support this week.’
Andrew Carter, CEO of English winemaker Chapel Down
Drinks will be taxed in line with how much alcohol they contain, which cuts the rates paid from 15 to six.
This was accompanied with a ‘draught relief’, a new, lower rate of duty on draught beer and cider which will knock 3p off a pint.
As the share prices of Wetherspoons and Heineken ticked higher, the reforms were also warmly welcomed by pubs and alcohol businesses.
Todd Hibbert, manager of the Bank of Friendship, an independent pub in Highbury, North London said: ‘The duty cut is good news for everyone involved in the hospitality trade, and will encourage brewers to innovate, particularly with lower ABV beers, which will help the growth of the low and no alcohol sector and responsible drinking.
‘Hopefully this will be just the start of more support from the Treasury as many independent pubs are still getting back on their feet after the pandemic.’
The Campaign for Real Ale, which has long campaigned for alcohol duty reforms, hailed the new draught rate as a ‘game changer for cask beer drinkers, cider and perry drinkers and the Great British local.’
British pubs have been hit hard by the pandemic as they were forced to shut shop over three lockdowns
‘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.’
However, for Paul Jones, managing director and owner of Cloudwater Brew Co, the Budget did little to help small craft brewers.
‘These measures feel like they reward people with well-established businesses that have been profitable for decades if not hundreds of years. I don’t see what they do to level the playing field,’ he told This Is Money.
‘For us it feels as if we’ve been delivering growth, jobs, revenues in taxes… and we’ve been overlooked.
‘The smallest and least profitable industry is craft, if we get any benefit from [today’s] measures… the earliest we’re going to see this financially is in April 2023.
‘There will be immense pressure on a great number of craft breweries… We’re faced with another waiting game. This package today squeezes the smallest and most vulnerable vibrant, progressive, and innovative part of British beer.’
Elsewhere, the English wine industry was happy to receive a special mention in today’s Budget as Sunak pledged to cut tax on sparkling wines like prosecco.
Andrew Carter, chief executive of English winemaker Chapel Down, said ‘the duty saved will enable the industry to create jobs, support families, and bring even more young talent into this exciting, developing sector as it recovers from the pandemic.’
‘The Chancellor’s patronage will make us more competitive against our worldwide competitors and this change will enable us to reinvest in our business and to continue growing at pace.
‘Chapel Down, along with the wider English wine industry, will be raising a toast to the Chancellor for his support this week.’
‘Devil in the detail’ for business rates
The year-long reduction in business rates will be another welcome relief for British pubs and the wider hospitality sector after months of lobbying.
The Chancellor said up to 400,000 retail, hospitality and leisure properties will be eligible for the temporary relief next year, although has not set out its eligibility criteria yet.
Businesses will receive up to 50 per cent off their bill, subject to a £110,000 cash cap per business and will apply in 2022-23 until the revaluation in 2023.
The Government will also freeze the business rates multiplier which will keep the small business and standard multiplier at 49.9p and 51.2p respectively, rather than rising to 51.4p and 52.7p.
It says the move will save businesses £4.6billion over the next five years.
‘We very much welcome the Chancellor’s move today to extend the 50 per cent business rates relief for the hospitality and leisure sector for the next financial year,’ said Kate Nicholls, head of trade body UK Hospitality.
‘The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.’
Others are disappointed the Chancellor did not announce a complete overhaul of business rates.
‘It’s encouraging to see the Chancellor finally act upon the need to reform the business rates system… A one-year 50 per cent discount for the retail and hospitality sectors will help some struggling high street businesses, but not all,’ said Jace Tyrrell, chief executive of New West End Company.
‘By capping the 50 per cent discount at £110,000, the benefit means little to city centre businesses.’
Chris Sanger, EY’s Head of Tax Policy added: ‘With revaluations moved to every three years, the Chancellor has improved the system.
‘However, beyond the immediate cut, this still leaves retailers paying almost five times more in business rates than their share of the economy. The half price offer for the next year will help, but does not address the long-term issue.’
Despite Sunak’s optimistic tone, small businesses still have challenging months ahead against the backdrop of rising utility and wage bills and the supply chain crisis. and are calling for the government to go even further.
‘Given this toxic cocktail, it is imperative the Government go further to support businesses in our sector,’ said Nicholls.
‘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.’