Chancellor Phillip Hammond outlined his Spring Budget earlier this week. But how will it affect the hospitality industry?
Wages set to rise
The National Living Wage (NLW) is set to increase by 30p by £7.50 per hour in April 2017, which is ahead of the government’s plan to increase the NLW to £9 an hour by 2020. So what does that mean? Well, this is set to cost the hospitality industry an extra 13.3m in wage bills by 2020.
One of the policies that stood out in last year’s Spring Budget was the sugar levy and this is still set to go ahead. However, it is set to raise £130 less then what was initially forecast. As many producers have already taken the steps to reduce sugar in their drinks. From 2018, drinks with at least five grams of sugar per 100ml will be taxed at 18p per litre. The rate will rise to 24p for those drinks that have eight grams of sugar per 100ml.
The beer and cider tax is no longer frozen and is actually set to rise to 3.9% from 12 March, as is the case with wine and spirits. This will result in the price of a pint going up by 2 pence, which is the first time it has increased in 5 years. This rise in price is set to hit consumers and retailers. With some estimating that it will lead to pub closures across the country.
Hammond has announced three measures that are due to help those affected by the business rates increase in April. He outlined that businesses that are losing their small business rate relief will only see their bill increase by no more than £50 a month next year. Pubs with a rateable value of less than £100,00 will receive a £1,000 discount on their business rates bill. And lastly, the pubs and restaurants that are not assisted by the last two measures will have the chance to apply for a share of £300m funding. Which has been allocated to the local authorities to help businesses that are affected by the business rates.
This is set to save the sector over £24m, however, some are worried that does not help enough and could still see small hospitality businesses out of business.