The Chancellor of the Exchequer, Jeremy Hunt, delivered his annual Spring Budget for 2023 on Wednesday 15th March. Prior to this, the hospitality industry was just one of the sectors pleading for reform, following turbulent times post-pandemic.
Although members of the food and drink industry broadly welcomed the Chancellor’s Spring Budget, there were questions raised around the viability of the Apprenticeship Levy, the Government’s ability to tackle the labour crisis and regulatory burdens.
So, what are some of the key takeaways for the hospitality industry?
- From August, alcohol taxes on wines will rise by up to 50p a bottle, but the duty charged on draught beer will be up to 11p lower than the duty in supermarkets.
- Labelled the ‘Brexit pubs guarantee’, the Draught Relief duty has been extended from 5% to 9.2% for draught pints of beer and cider in pubs across the UK. This means from 1st August 2023, the duty on these drinks will be 11p lower than in supermarkets. The drinks must be sold from draught containers of over 20 litres to be eligible for duty relief.
- From April, corporation tax paid by businesses on taxable profits over £250,000 will rise from 19% to 25%.
- For smaller businesses, the Annual Investment Allowance has increased to £1 million. Hunt said that 99% of all businesses will be able to deduct the full value of all their investments in IT equipment, plant or machinery from that year’s taxable profits.
- The Energy Price Guarantee, which limits household bills at £2,500, will be extended until the end of June. Whilst this does not apply to businesses, protecting consumers’ pockets until the price of energy drops may lead to an increase in consumer spending.
No Apprenticeship Levy reform
The Chancellor announced no reform to the Apprenticeship Levy in the Spring Budget. Introduced in April 2017, the Apprenticeship Levy makes large organisations set aside 0.5% of their payroll for apprenticeships. Many businesses claimed that government were ‘holding back investment’ in critical training that could accelerate economic growth, hike wages and boost productivity.
Despite this, a new ‘returnerships’ skills offer will be granted to over-50s wanting to return to work in a new sector, and a voluntary employment scheme for disabled people worth £4,000 per person will fund 50,000 job placements every year. Through this, the government is encouraging people back to work in a bid to boost the economy.
Labour crisis: Back to work
Hospitality businesses are continuing to struggle post-pandemic, with vacancy levels running at 56% higher than pre-pandemic, but measures such as the ‘returnership’ skills offer will be significant in incentivising people back to work. The government’s announcement on childcare and measures to support over-50’s re-enter the workforce are also both areas for which the hospitality industry has been calling for action, so the movement will be one that has great impact on the industry.
Some businesses argue, however, that The Chancellor has failed to outline how the major challenges of labour shortages plaguing the economy will be addressed. Although they welcome the introduction of ‘returnerships’ and increased skills bootcamp funding, it is believed to be a medium-term solution and there are calls for a short-term response to be introduced to support the economy in the ‘here and now.’
So, while things are better than feared, it’s still a tough time for UK businesses wrangling against the cost-of-living crisis. Will the announcements of the Spring Budget have an impact on your hospitality business? If so, we’d love to hear from you.