Responding to the Chancellor’s Spring Statement in the House of Commons today, Emma McClarkin, Chief Executive of the British Beer and Pub Association said:
“We are very disappointed that the Chancellor decided not to extend the 12.5% rate of VAT for hospitality. The sector remains on a knife-edge as it emerges from the pandemic and the impact of the recent energy crisis and invasion of Ukraine has ensured the turbulent times will continue for pubs and brewers just as we had hoped to build the road to recovery. The coming months could be some of the hardest yet for our pubs and brewers*.
“The failure to act today represents a huge missed opportunity to help brewers and pubs in the face of sharp increases to the cost of living and doing business. The report we published last month set out the undeniable case for making the 12.5% rate of VAT permanent. The economic and societal benefits of making this change would be enormous and enable the tourism and hospitality sectors to truly act as an engine for the UK’s recovery as we look beyond the pandemic.
“We welcome the Chancellor’s announcement today to increase the Employment Allowance, the threshold for National Insurance contributions, the planned increase in the income tax threshold and the fuel duty cut. However, the fact remains that these will do little to help the bottom line for thousands of pubs and brewers around the country struggling with increasing overheads and concerned consumers.”
“In the Autumn Budget it is crucial that the punitive overall tax burden on our sector is addressed to reignite our industry with a long-term approach and vision for our sector recovery. This means business rates reform to reduce the disproportionate burden on pubs and implementation of alcohol duty reform proposals that supports Britain’s brewers, pubs and drives consumers towards lower-strength products.”
Notes to Editor
- *The cost to the pub industry of VAT on food and soft drinks increasing from 12.5% to 20% will be £516m in 2022/23 rising closer to £600m per year as demand returns to pre-pandemic levels.
- A report by the British Beer and Pub Association, UKHospitality, the Tourism Alliance and the Association of Leading Visitor Attractions found that a permanent rate of 12.5% VAT would create 286,850 jobs and deliver £4.6 billion in net present value of fiscal gains to the HM Treasury over 10 years.
- Maintaining the previously announced increase in employer National Insurance contributions from 13.8% to 15.05% whilst not increasing the threshold at which this becomes payable above the £9,100 announced in the Autumn budget will cost pubs £27m.
- The increase in the Employment Allowance from £4,000 to £5,000 for small businesses will be worth approximately £36m to pubs.
Press release from BBPA
For further information or to set up an interview with Emma McClarkin please contact: fmorriss@beerandpub.com / 07528 549524.