Trade bodies and operators have responded to the measures announced in the chancellor’s Autumn Statement yesterday.
There was widespread relief that the small business rates relief was extended but concern about the decision not to continue retail relief. There was some scepticism about the Government’s northern powerhouse plan and a mixed reaction to the announcement about the Apprenticeship Levy.
Rooney Anand, chief executive of Greene King, said: “As a pub company, economic growth and consumer confidence are integral to our success. The Chancellor’s overall plan for bringing the country back into the black means taking hard decisions and it is good to see that he is broadly sticking to his plan.
“I would urge more flexibility in some areas to support business investment. As a large employer we face significant cost increases from the National Living Wage. Business rates remain a £7.3bn burden on the sector and we would like to see a reduction. Greene King employs 3,500 apprentices and the proposed levy remains a concern especially if it penalises larger businesses already doing a good job. I hope the Chancellor can get this right in the March Budget.”
James Baer, managing director of Amber Taverns, said: “I thought the announcements were reasonable and the tax credit backtrack will certainly help some of our customers.
“Business Rates are the big issue going forward and to help the regions we actually need more of the burden to fall on London and the south east. The retail relief not being extended is one of those things , obviously would have preferred it to stay.
“On the Northern Powerhouse, let’s see – I’m not convinced the National Living Wage helps and is clearly more manageable in Leeds, Manchester and Newcastle than say Redcar or Barrow.”
William Lees-Jones, managing director of JW lees, said: “”We’re concerned that the Chancellor cannot get his head around the fact that business rates are an outmoded tax as the world goes online and clearly the living wage remains the most significant increase in costs that we have faced for a long time.
“The Northern Powerhouse is generally a good thing since the Manchester based economy is booming but the devil is in the detail regarding devolved powers and budgetary responsibility – London is an expensive place to do business and both rents and people are more affordable in Manchester and it’s only one hour and 40 minutes to Euston by train – London is looking overcooked in many ways and we are seeing more and more people coming to the North to live and work because the quality of life is getting better.”
Peter Borg-Neal, chief executive of Oakman Inns, said: “Anyone who expected a load of good news in the first Autumn Statement of a five-year Parliament with the country still running a huge budget deficit must have been delusional. However, the outcome is better than I expected and certainly could have been a lot worse.
“The underlying good news is that public finances are in a slightly better state than expected which will, hopefully, pave the way for further tax cuts over the lifetime of this Parliament.
“I was also pleased to read about the initiatives to encourage the building of affordable housing. It is good news for employees in our industry who find it hard to get on the housing ladder. Furthermore, over priced housing sucks up disposable income and damages the leisure pound.
“The creation of new enterprise zones is good for our sector and canny operators will give further thought to new locations that might benefit.
“I am relieved that there will be no cuts to Police spending. The safety of our customers and employees is the most important consideration of all.
“One measure that was welcome by its absence is that the feared tax grab on entrepreneurs relief hasn’t materaialised. It is a huge risk starting and building a business. Those of us that do so deserve to retain some of the upside – particularly given that we will have already paid over a third of our revenues to the exchequer over the lifetimes of our businesses.”
On the less favourable side of the Statement, Borg-Neal said: “The apprenticeship levy is an extreme irritation and yet another tax on employing people. We don’t need the Government taking with one hand so they can claim to be supporting apprenticeships with the other.
“Furthermore, if the Government expects us to buy into the argument that we should be happy to pay higher levels of NMW to replace tax credits they should be decreasing payroll taxes, such as ERNI rather than inventing new ones.
“Business Rates are a horribly unfair taxation without representation and they need root and branch reform. I believe we need a change in the way business rates are assessed that looks at profitability rather than turnover. High quality pubs and restaurants that serve quality, freshly prepared food have higher turnover and higher costs than more value lead concepts – who might have lower sales but the same profit. However, they employ more people and they tend to lift the quality of the retail environment. It is unfair that they are taxed disproportionately. It is a shame that the uncertainty will continue whilst we wait for the outcome of the review.
“Arguing about the various types of Business Rates relief is to miss the point. We need to get on with a new structure that delivers fairness without the need for a complex myriad of concessions.
“I was unsurprised but disappointed that there is no sign of VAT reform. I make no apology for banging on about the ridiculous anomalies that exist. For example, a supermarket can produce a ready-meal in a factory, package it up, transport it to a hub, then to a store and then retail it and apparently there is no value added. A restaurant or pub operator puts an apple on a plate and that attracts 20% VAT. That is clearly unfair and needs to change.
“As an industry we deserve more support from number 11 and the fight will go on. I am meeting George Osborne at a Business Briefing session this evening and top of my list will be the VAT argument.”
Damon Horrill, founder of Cornerstone Inns, said: “Many pub businesses especially in the tenanted pub sector are on the brink, business rates are the biggest tax we pay and need to reflect profitability. The assessment models and appeal processes have been proven flawed, many tenants have been forced out of pubs that with a fairer rates assessment could have survived. These are community centres and value adders, social value creation is something that the government needs to recognise and discount business rates for pubs accordingly. The opportunity was there to throw a lifeline in the shape of reform, putting it off till 2016 is putting it out of reach for many failing pub businesses.
“The scrapping of the retail discount together with rises in labour costs with the living wage will hit operators hard as it is, many of whom are at tipping point. Any cost increases will make pub agreements less workable, can’t see pub co rents being reduced to reflect the balance of profitability. An industry in recovery needs greater understanding and protection from over taxation of the business operators, there’s nothing left to give. Continuation of small business rates relief is welcome but no help to the pubs with rateable values exceeding the threshold, which unfortunately is most. Reductions in levels of corporation tax are welcomed but of little value to pub operators whose profits are negligible and being further squeezed.
“There ought to be support and recognition for pub operators developing in house apprenticeship schemes. Many operators invest a great deal in on the job training, we don’t have cash to offer up to government administered apprentice schemes but are happy to give our time and expertise freely and pay apprentices proper wages, value enough.”
Martin Couchman, deputy chief executive of the British Hospitality Association, said: “We are pleased that 98% of businesses will not be paying the apprenticeship levy because of the £15,000 payroll threshold announced in the Autumn Statement.
“We await details of how smaller businesses will be supported in training apprentices. We are pleased to see that a new employer led body will set apprenticeship standards and ensure quality, but note that the hospitality industry has already made a lot of progress in developing apprenticeship standards.”
“The introduction of the NLW from April 2016 will have a major impact on hospitality businesses’ finances so we are pleased to see a slight softening of costs through the decision to delay increases in auto enrolment pension contributions by 6 months from autumn 2017 and again in autumn 2018.
“We were pleased to see the announcement of the new £40 million Discover England Fund to boost tourism, and the government’s recognition in the Autumn Statement of the contribution of the industry to the UK economy.”
Tim Page, chief executive of CAMRA, said: “We are disappointed that the majority of pubs in England face a £1,500 increase in the amount they pay each year in business rates due to the Chancellor’s decision to discontinue the retail relief scheme. At a time when pubs are being lost at the rate of 29 a week across the UK, it is vital that further action is taken to reduce the tax burden on pubs.
“The decision to axe the £1,500 business rate reduction that was benefiting most pubs increases the importance of a further cut in beer duty in 2016 and the need for longer term reform of business rates to reduce the burden on pubs that are so important to local communities.”
BBPA chief executive Brigid Simmonds said: “The extension of Small Business Rate Relief for another year is welcome, and is worth £25 million, and is something we had specifically requested. One third of pubs will qualify, 15,000 premises, in total.
“However, it is very disappointing that the Chancellor has not extended retail relief for a further year – this is effectively a £1,500 tax increase for the majority of pubs, and will add £46 million to pubs’ rates bills.
“Retail relief was providing a discount for pubs with a rateable value of £50k or less, which is 75 per cent of all pubs. This is a particular problem in the run-up to the revaluation in 2017 as rates bills have become out of kilter with the value of individual businesses.
“Britain’s pubs face a total tax bill of £7.3 billion per year, so we will be keeping up the pressure for further measures, such as more action on both beer duty and business rates, as we move towards the Budget in March.
“I do welcome the announcement that small businesses like pubs will typically not be burdened with the Apprenticeship Levy, as this would have placed an excessive burden on what are mostly small businesses. It is crucial that the Levy system is straightforward and allows those that pay into the Levy fund to access their full contribution to support apprenticeships.
“I also welcome the £40 million for Visit England to fund product development, given the vital role that pubs play in the wider tourism industry.”
Kate Nicholls, chief executive of the ALMR, said: “Following today’s Autumn Statement, the ALMR has welcomed the extension of business rates relief for another year, but reminded the Government of the need to implement a root and branch reform to bring about a fairer deal for licensed hospitality businesses.
“The extension of the small business rate relief for another year is certainly welcome as this is something the ALMR has consistently pushed for. It is disappointing, however, to see that once again we are in a position of urging the Government to hasten with real and meaningful change to the business rates system and to bring about root and branch reform.
“This is increasingly a system that sees business relying on multiple discounts and allowances and is a recipe for confusion or avoidance, something the Treasury has already highlighted. The licensed hospitality sector is carrying an enormous burden in the shape of business rates, with pubs accounting for 2.8% of all UK tax receipts; a situation that is plainly unfair and unsustainable for some businesses. The Chancellor indicated that the review of business rates will report at next year’s Budget Statement and we are hopeful that it will bring with it good news for the sector.
“We are also concerned that the forthcoming apprenticeship levy will place further costs burdens on businesses already facing shrinking margins. The ALMR’s Benchmarking Report shows that in labour intensive businesses such as pubs and bars, payroll costs often account for over half of all operating costs and almost one-third of turnover. This extra tax is may well have the effect of distorting payroll costs even further and is likely to undermine in-work investment and training in staff.
“We are pleased to see that there will be no cuts to police budgets at this time. Any reduction in police budgets or numbers may have seen the licensed hospitality faced with the prospect of covering any security shortfall, with added responsibility for managing the UK’s night-time economy, without any real indication of how this was to be achieved.”
