UK: UK Chancellor Jeremy Hunt has announced that the 75 per cent discount on business rates [up to £110,000] for businesses in the hospitality, leisure and retail sectors has been extended by another 12 months as part of his Autumn Statement.
At a cost of up to £14.3 billion, the government is also freezing the small business multiplier at 49.9p for smaller properties and 51.2p for larger properties for another year.
The moves will be welcomed by businesses across the hospitality, retail and leisure sectors, with the chancellor estimating that the latest measures to boost the UK economy will save independent shop owners more than £20,000 and each independent pub over £12,800 on average per year.
Despite the announcements, Mr Hunt intimated that the sectors benefitting from the business rate discount extension “cannot rely on temporary forever”.
At the same time, alcohol duty has been frozen until 1 August next year at least.
In a bid to accelerate housing development, £110 million will be allocated to delivering nutrient mitigation schemes [offsetting nutrient pollution when applying for planning permission], an additional £32 million will be directed to “busting the planning backlog” and £45 million will go to local authority planning in order to deliver up to 2,400 new homes.
Elsewhere across the Autumn Budget, Mr Hunt revealed that National Insurance will be cut by two per cent [from 12 per cent to 10 per cent] on 6 January. Class 2 National Insurance for self-employed workers will be scrapped altogether and Class 4 National Insurance will be reduced by one per cent to eight per cent per year.
Furthermore, the National Living Wage will rise to £11.44 per hour [up from £10.42] from April and will apply to 21- and 22-year-olds for the first time, following a recommendation from the Low Pay Commission that will bring almost three million more people into the wage bracket. It is reported to be the largest ever cash increase to the rate, according to the Treasury, and is equivalent to £1,800 a year for those on the lowest income.
The chancellor expects the measures announced in the Autumn Statement to “attract £20 billion more business investment a year in the next decade”.
He also anticipates that the UK economy will grow by 0.6 per cent this year, and by 0.7 per cent in 2024.
Following the Autumn Budget announcement, industry figures and organisations gave their response to the economy growth measures.
UKHospitality objected to the ten per cent rise in National Living Wage [said to be 28p more than initially expected], saying that it would have a “knock-on effect” on businesses already facing rising costs.
CEO Kate Nicholls said in a statement: “If businesses are expected to deliver these wage levels, there must be action to drive down costs in other areas. The first priority on that list needs to be extending business rates relief and freezing the multiplier at the Autumn Statement.
“Without action on business rates tomorrow, many businesses will not even make it to April to deliver these wage increases and jobs will be lost. That scenario benefits no one.
“In the longer term, stronger consideration needs to be given to a lower rate of VAT for hospitality to create a more sustainable tax burden for a sector that employs 3.5 million people and delivers £93 billion to the economy,” she added.
Philip Harrison, chairman of branding, interior design and architecture specialist Harrison, called the measures “hugely promising and a huge relief for the industry as a whole” but suggested more could have been done to support the industry, including price capping of energy and investments in apprenticeships.
Lionel Benjamin, co-founder of AGO Hotels, welcomed the cut to employee National Insurance and the freezing of the business rates multiplier but said that it was also a “missed opportunity for the government to announce a complete review of the business rates system”.
Nik Antona, chairman of the consumer group Campaign for Real Ale [CAMRA], echoed Benjamin’s sentiments, praising the business rate discount extension while saying that the alcohol duty freeze was a “missed opportunity” to boost pub-going in the UK.
Stuart Houston, finance director at RBH Hospitality Management, stated: “While providing some assistance for hotels and their staff, the forecast for profitability of businesses continues to be a concern. We would also have hoped for an announcement about the level of VAT in hospitality, which has been a focus for industry bodies to help drive demand to hospitality, stimulate the high streets and bring the UK taxation environment more in line with other countries for our industry.”
In more critical terms, John Webber, head of business rates at Colliers, criticised the chancellor for “putting the final nail in the coffin for the high street” and “only freezing the multiplier for small businesses – resulting in massive 6.62 per cent business rates hike next April for most retailers”.