Measures featured in today’s Budget, including an increase in beer duty and the raising of the nil tax threshold, have dealt further blows to the hospitality sector, according to industry experts.
The price of a pint is set to rise another 10p – after the Chancellor George Osborne stuck to plans to increase duty by 7.5%. The rise in duty is the third price rise of the year after January’s VAT hike and brewery rises in February.
“In sticking to the failed policy of the beer tax escalator, the Government has delivered a hammer blow to pubs and pubgoers," said British Beer and Pub Association chief executive Brigid Simmonds.
"This will not raise any more money for the Treasury, cost ten thousand jobs this year alone and see many more pubs close. This policy hampers growth and damages pubs and the communities which rely on them. The fight to end this damaging policy continues.”
Stuart MacFarlane, president of Anheuser-Busch UK, said: "The Chancellor should think again and give the nation's favourite drink a break. This is a disappointing result -- with inflation far higher today than could have been envisaged when the escalator was brought in, the Chancellor should come to the aid of Britain's hard-pressed brewers. Instead he has hit us with a tax hike of over seven per cent. This decision is bad for brewers, bad for pubs and bad for consumers."
Mark Sheehan, managing director at Coffer Corporate Leisure said: “By raising the nil tax threshold, the army of lower paid employees working in the hospitality sectors will benefit in the short-term, but by increasing the burden on those businesses who employ these people with seemingly endless cost increases, how can they be relied on to sustain the economy?
“The Budget offers little help to alleviate pressure on operators’ suffering and does little to kick-start consumer spending. Altogether, the net increase in income tax and national insurance against savings for many earners will hit consumer spending further. This is compounded with the recent VAT increase in December and the outstripping of wage increases by inflation and is a hard combination to bear for operators.”
However, the announcement that Income Tax relief on the Enterprise Investment Scheme will increase from 20% to 30% in April was welcomed.
Sheehan said: “On a positive note the increase in EIS relief will help to attract investors in small businesses. With bank debt all but gone for many, raising cash by selling equity in the answer and this tax relief will help.”
Simon French, analyst at Panmure Gordon, said that it was "a fairly benign Budget for the travel and leisure sector.
He said: "Most companies in the sector will benefit from the 2% reduction in corporation tax from April this year and the 1p per litre cut in fuel duty will slightly alleviate pressure on household finances."
Other measures announced included, the extension of the small business rate relief holiday by one year to October 2012, at a cost of £370m.
A 4p rise in fuel duty was cancelled. Osborne announced the scrapping of Labour's fuel duty escalator and cut duty by a further 1p, a measure that takes effect at 6pm.
