Chancellor Jeremy Hunt delivered his financial update yesterday (15 March), with the corporation tax increase confirmed to rise to 25%, the extension of draught relief, and the energy price guarantee set to remain at £2,500 until July.

As initially announced last year, corporation tax will rise from 19% to 25% in April, with Hunt aiming to create a “pro-business, pro-enterprise tax regime” and saying only 10% of companies will pay the full 25% rate/

Hunt further announced the draught relief – called the “Brexit pubs guarantee” – with duty paid in pubs to be up to 11% lower than elsewhere, which would not have been possible inside the EU, according to him.

Furthermore, the energy price guarantee will remain at £2,500 for an additional three months after initially being set to rise to £3,000 in April.

Hunt also discussed measures to tackle economic inactivity. Sector-based apprenticeships – called ‘returnerships’ – will be introduced for over-50s who wish to return to work in new sectors. The over-50s age group will also be provided with financial health advice.

Hunt will launch a new voluntary employment scheme for disabled people, scrap the work capability assessment, and introduce a £400m scheme for mental and physical health support.

In its submission to the chancellor last month, UKHospitality urged Hunt to introduce a new, lower business rates multiplier for hospitality; implement minor short-term immigration reforms; to reform the Apprenticeship Levy; to introduce a temporary reduced rate of VAT; and to give clear direction to Ofgem to intervene in the non-domestic energy market and instruct suppliers to renegotiate over-inflated contracts.

In a letter to Energy Secretary Grant Shapps this week, leaders in the hospitality sector further called for the government to instruct Ofgem to enable energy contracts signed when prices were higher last year to be renegotiated, due to wholesale prices now being lower.

Commenting on the budget, UKHospitality CEO Kate Nicholls said: “With hospitality businesses continuing to struggle with vacancies running at 56% higher than pre-pandemic levels, the measures announced today are significant in incentivising people back into work and hopefully alleviating crippling labour shortages. The wider economic forecasts also give us encouragement that consumer confidence and spending are in for an upturn, albeit over time.

“The significant reforms to childcare and the measures to help the over 50s re-enter the workforce are both areas on which UKHospitality has been calling for action and we’re pleased the Chancellor has recognised the help it can offer tackling the enormous vacancies in hospitality.

“Maintaining current levels of energy support to consumers, freezing fuel duty and inflation reducing will help hard-pressed households and increase disposable income, which will be a huge boost for venues in desperate need of trade.

“This will be particularly needed as the sector is still set to see huge energy price increases when current support ends in April, which unfortunately was not addressed. It remains the case that we need to see urgent action on the market failures identified by Ofgem in its non-domestic review update yesterday. The current timeline of further action by the summer is not good enough.

“The reduction in draught duty is positive and we hope this will incentivise more visits to our pubs, restaurants and hotel bars. Addressing draught duty is a good start and I would urge the Government to consider rolling out this type of tax cut across the wider drinks market.

“With duty primarily paid by suppliers, such as breweries, it’s essential that any benefit is passed through to venues to help deliver the Government’s objective of reducing inflation and growing the economy.”

Michael Kill, CEO, Night Time Industries Association, commented: “While we welcome the news on draught beer and fuel duty, this Government continues to overlook thousands of independent businesses, including nightclubs, venues, festivals, events, theatres, casinos, suppliers, and millions of employees and freelancers across the Night Time Economy. This budget has not gone far enough and will, without doubt, see a huge swathe of SMEs and independent businesses continue to struggle financially or disappear in the coming months.”

“They are continually having to firefight crisis after crisis, from onerous operating costs to rail strikes, supply chain issues and workforce shortages, and no meaningful support to stem the immediate situation.

“The lack of clarity on corporation tax thresholds and the extension of the Energy Relief Scheme will be subject to further details being announced by the Government. This follows the letter to the Government yesterday from the energy regulator OFGEM, highlighting the flaws in the scheme and how it impacts businesses, as energy companies profiteer from the most vulnerable sectors, with inflated security deposits, energy rates and uncapped service charges.

“Without the reduction in VAT, many of these businesses will have to consider their future, which will have a devastating impact on local communities, families and individuals who have committed their lives and livelihoods to this sector.”