Budget rate break ‘epic can kicking’

London

Chancellor Rishi Sunak announced that leisure and hospitality businesses with a rateable value of less than £51,000 would be exempt from paying business rates over the next financial year.

The move was described to us as “epic can kicking” by John Webber, head of rating, Colliers International.

Webber said: “Whilst helping SMEs is to be applauded, there is nothing in the Budget that tackles the issues of the larger businesses – and these are the ones shedding the jobs. Without helping larger businesses on business rates, the silent majority is side-lined yet again.

“Promising yet another review of business rates, to be heard in the Autumn seems non-sensical when the issue has already had a detailed review and the Treasury Select Committee gave its recommendations last November, many of which appear to be ignored. One wonders what was the point of all the expenditure in time and money, if we are purely to review again.”

Webber added: “This government claims it is the government to ‘Get Things Done’. This is not ‘done’ in my book. Yet again another trick has been missed in the chance to get some proper reform.

“Unless business rates are properly reformed, as recommended by the Treasury Select Committee, these plans will do nothing to counter the impact of the 2017 business rates revaluation and introduction of downward phasing and simply won’t go far enough to help retailers struggling with their current rate bills. We are now destined to see more shop closures and job losses in the high street in the months ahead.”

The report on business rates in the UK carried out by the Treasury Committee, described the system as “broken” and called for the government to be “creative” in looking at other options. The report said the tax - based on the estimated rental value of the property - placed greater costs on physical businesses than online traders and had grown as a proportion of the total tax paid by businesses since 1990, when the current regime was implemented.

The government rejected the committee’s views and underlined its support for the existing system of tax reliefs, commenting: “The government does not agree that the number of reliefs available under a particular tax can be taken as evidence that a tax is ‘broken’”.

Russell Kett, chairman of the London office of HVS, was similarly unenthused about the Budget, noting that there was no move to remove or reduce VAT in the sector or to reduce employers’ national insurance contributions, commenting: “Despite this Budget being described as ‘the biggest giveaway in 30 years’ there is sadly little to bring much short- or longer-term cheer to the vast majority of regular hotel owners, investors and operators within the UK.

“Some businesses have already started to cut back on staff and curtailing all but the most necessary expenditure, in some cases most severely, in a response to plummeting occupancy levels of which the government seems to be totally unaware. Maybe they only will once these businesses file for bankruptcy. That would take us back to the early 1990s and we really don’t want to go through all that again. I urge the Chancellor to do more to prevent this from happening before it’s too late.”

UK Hospitality CEO Kate Nicholls added: “While the measures announced today may give smaller hospitality businesses some breathing room, it’s vital to recognise larger operators, and the huge number they support, but which have today been utterly ignored at a time of business crisis. The perverse nature of the current system is underlined by the ongoing coronavirus situation, with punishing payments still expected of companies whose venues may not be able to open or operate.”

 

Insight: My goodness you hear some language when you’re a journalist. And yes, much of it is coming out of your own mouth, but really that just encourages others and the air was all manner of colours in the chilly palate after Sunak’s first Budget.

The consensus was that this effort was the very embodiment of Boris Johnson’s “f*ck business” quote, with Milk & Honey’s Jonathan Downey commenting: “There is absolutely NOTHING in that Budget that will help my or any similar business struggle through a Coronavirus shut/slow down, apart from two weeks of statutory sick pay paid for employees. Big. F*cking. Deal”.

And as for business rates, that bête noir of the sector? The government didn’t agree with the perfectly good review, so will have another one in the Autumn, when one hopes that it’s more to its liking. Likelihood of it also being to hospitality’s liking? Unlikely.

With the cloud of COVID-19 hanging over The Budget, there was also a lack of clarity on that other issue which has been perplexing the sector: where on earth it can find staff, any staff at all? There was no sign of what might happen at the end of the year or what efforts are being made to convince the citizens of the UK that they might fancy working in the sector. One hotel CEO, who has regular contact with Number 10, told this hack that those behind the big black door didn’t appear to have even a basic grasp of economics.

So, if you’re bigger than an SME, you’re deemed to be big enough to fend for yourself. Get the swear jar ready.

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