Christie & Co's Pubs team comments on the Spring Budget 2017
The Spring Budget 2017 was announced Wednesday revealing what seemed to be a positive outlook for the UK economy; in terms of growth, the UK is second only to Germany, unemployment is at an 11 year low, wages are set to keep rising despite inflation, corporate tax is set to fall and the overall growth forecast has been updated from 1.4% to 2% for 2018.
One of the main focuses of the announcement was expected to be the impending business rates revaluation which comes into effect on 1 April 2017. The outcry from businesses across all sectors on this topic was apparently heard: a new initiative to alleviate the pressure for smaller businesses just coming out of small business rates relief was announced meaning that these businesses will not see an increase of more than £50 a month. However, due to the fantastic campaigning done by Kate Nicholls and the rest of the ALMR, the pub sector received a special mention: there will be a £1000 discount for those pubs with rateable values of under £100,000, which includes 90% of all pubs in the UK.
However, another cost pressure for operators was announced through the guise of alcohol duty which, along with tobacco duty, is set to rise in line with RPI inflation from 13 March 2017 which is not the continued freeze – or even decrease – that the industry had hoped for. As long as real wages, and therefore consumer spending continues to grow, this shouldn’t affect bottom lines in principal. However, at a time when other costs are hitting employers (such as business rates, National Living Wage, pensions auto-enrolment and the Apprenticeship Levy), it is certainly something the industry could have done without. Furthermore, the duty increase is likely to disproportionally affect the regional UK more than London and the South East.
Neil Morgan, Managing Director of Pubs & Restaurants at Christie & Co comments, “It is great that the government is clearly prioritising the licensed hospitality sector and small businesses in particular but in reality there is a negligible – if any – saving with the duty increase too, and many larger businesses will still suffer greatly from the cost hikes.
“Still, we applaud the ALMR for their hard work in getting the government to directly address the sector’s issues and it shows the important role that industry bodies play in representing pub owners’ needs so they can continue to run and develop their businesses.
“We anticipate further announcements which stem from the government’s promised consideration of how business rates are handled in the future and in the meantime, we will continue to advise licensed business operators of all sizes on how they can make the most of the new rules and the evolving landscape.”
