Budget 2021 – Government listening to hospitality sector but more support needed, says Malcolm

Malcolm Ireland, the head of Harrison Drury’s leisure and licensing team, has welcomed the support for the hospitality sector in the chancellor’s autumn budget announcement, though warns more measures will be needed to help the sector continue its recovery.

Malcolm, who is one of the region’s leading hospitality and licensing lawyers, said the chancellor’s decision to offer a 50 per cent business rates discount and cut tax on draught beer and cider were a sign the government is recognising the importance of the sector – something he believes it has failed to do in the past.

However, he pointed out that some of the detail from the announcement is yet to be finalised and that the measures will undoubtedly leave some businesses disappointed.

“Business rates have been in dire need of reform for years and the headline that there will be an extension of the 50% business rates relief for the hospitality and leisure sector is welcomed,” comments Malcolm. “However, we need to see more detail of the announcement to see just how many businesses it will apply to and the £110,000 discount cap certainly detracts from the headline.

“We didn’t get our other big ask which was an extension to the 12.5% VAT rate for hospitality businesses. There was no mention of this during the chancellor’s speech and so we assume VAT will move back to the headline rate as planned from April 2022.

“Similarly, the freeze on alcohol duty and wider simplification of alcohol duties is great news in principle, as is the so-called ‘draught relief’ which will see a 5% duty reduction on draught beer and cider to support pubs and brewers.

“However, the draught relief will only come into effect in 2023 and the decision to apply it only to containers over 40 litres has already angered many smaller craft brewers who tend to utilise smaller containers.”

Malcolm, who joined Harrison Drury earlier this year, believes more action needs to be taken to help the hospitality sector deal with staff recruitment and retention headaches, cost increases, rising energy and utility bills, and supply chain issues.

“The budget was not light on content for the thousands of hospitality industry bosses and their teams that would have been following closely yesterday while working hard to run their businesses.

“There is some disappointment as so much more needs to be done to help a sector that in many ways has led the economic recovery in recent months, showing incredible resilience and innovation in the face of supply chain issues, rising costs and staff shortages.

“More support will be required to sustain the recovery of our hospitality sector and protect jobs and investment into 2022 and beyond, but the real positive news is that the sector was singled out for some targeted measures in the budget.  That means that the Government is finally recognising how important the sector is in its own right.”