‘Cut-and-paste budget’ – UK businesses complain of lack of help from chancellor

The chancellor has been accused of producing a “cut and paste” budget that failed to deliver the tax changes needed to protect pubs and restaurants.

The industry’s trade body, the British Hospitality Association, said Jeremy Hunt’s budget did little to help “the industry get through these difficult times” and failed to reduce the rising costs that businesses now face.

Allen Simpson, the agency’s deputy chief executive, said: “I listened to the budget and waited for the support the industry needed but it didn’t come; it was a cut and paste from last time.

“He’s pulling levers that he’s pulled before and it didn’t work, and we believe the levers he needs to pull are levers that support business costs.”

The chancellor has announced that the freeze on alcohol duty will be extended until September, a change expected to save 3p on a pint.

But the UK hospitality industry and businesses have been calling for the hotel industry’s value-added tax to be reduced to 12.5%, and for business tax rates to be capped at 3% in April when sales tax is expected to rise by 6.7%.

According to Hotel Market Monitor, more than 6,000 hotel venues closed in the 12 months to December 2023 due to cost pressures.

Stosie Madi, a partner at the Parkers Arms pub in Lancashire, said businesses were relying on the VAT cut and a lack of action could lead to higher prices for consumers.

She said: “He did not reduce VAT. That is the biggest thing that will help the hotel industry, which is already in trouble because all costs are going up.”

Chris Jowsey, chief executive of Admiral Pubs, said: “The industry estimates it’s worth around £114m a year. The problem is we pay £15bn in tax. So pubs are popular, but in that sense it’s not not enough.”

Retailers were also disappointed by Mr Hunt’s failure to cut business rates, which are set to rise in line with rising consumer price index (CPI) inflation in April.

Helen Dickinson, chief executive of the British Retail Consortium, which represents most major retailers, said: “How can a massive 6.7% tax increase in April be justified when the chancellor himself says inflation is expected to be close to 2%?

“The cost of living crisis is taking its toll on businesses and households. Consumer confidence remains subdued, with retail sales in 2023 being the lowest in four years. However, the Chancellor has done little to boost growth and investment, instead passing business rates through April increase to hinder economic growth and investment.”

People are also angry that the government has not reinstated duty-free shopping for overseas visitors, a relief measure that was withdrawn in 2021. More than 500 business leaders, backed by the British Chambers of Commerce and the Federation of Small Businesses, have written to Jeremy Hunt asking him to reinstate tax relief.

However, Hunt revealed that the pharmaceutical company AstraZeneca will invest £650 million in two new factories in Liverpool and Cambridge, which was welcomed with enthusiasm as a result of government support for the life sciences sector.

This includes a £450 million investment in a manufacturing site at the Speke Research Facility in Liverpool, which will support vaccine research, development and production at the site. There will also be a £200 million investment in new facilities in the Cambridge Life Sciences Technology Cluster.

Richard Torbett, chief executive of the British Pharmaceutical Industry Association, said: “AstraZeneca’s investment shows that if we get the policy environment right we can reinvigorate medicines manufacturing in this country and create new opportunities across the country. Jobs and prosperity.”

Elsewhere, IATA director general Willie Walsh strongly criticized the chancellor’s decision to increase air passenger taxes on some flights, accusing him of reneging on a September pledge not to raise flight taxes.

The changes mean air passenger tax will increase by 10% on premium economy and business class flights from April 2025. The increase will add £66 in tax to business class fares from London to New York, meaning fares could be as high as £647 after the change.

“This is a short-sighted money grab by a government that has run out of ideas, capacity and basic integrity,” said Walsh.