Too Little, Too Late?
Fiscal Phil announces boost for the licensed sector and the wider UK high street, but is it too little, too late?
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The Chancellor, Phillip Hammond, delivered the Autumn Budget yesterday, and it was clear that the efforts of vocal campaigners and industry bodies such as UKHospitality have been heard, with several measures being announced that should help boost struggling high streets across the UK. However, are these latest reliefs too little, too late?
It’s no secret that the licensed sector is in the midst of a challenging period – the latest UKHospitality Christie & Co Benchmarking Report, to be released imminently, found that operating costs (before rent) rose once again. This relentless trend of cost increases simply cannot be sustained for many businesses, particularly those in high street locations who are also faced with high rateable values. One of the measures announced to alleviate this pressure is a reduction in the business rates bill for small retail businesses, to fall by a third over the next two years. Once enacted, businesses with a Rateable Value of £51,000 or less will be affected, which is around 90% of cafes, restaurants, pubs and shops on the high street. In addition to this, a “Future High Street Fund” has been introduced, allocating £650m for local councils to invest in rejuvenating their beleaguered high streets.
Other positive, albeit less impactful, news for the sector includes a freeze on duty for beer, cider and spirits, which has long been a source of consternation, particularly given the increasing price sensitivity of consumers. When released, the UKHospitality Christie & Co Benchmarking Report 2018 will show a not insignificant decline in wet margins in the year, indicating that more operators are having to take a hit on margins rather than raise prices in conjunction with costs. Additionally, with uncertainty around the UK’s departure from the EU and the recruitment challenges that Brexit will bring with it, the encouragement for small businesses to develop skills domestically through apprenticeship schemes is welcome, albeit a fairly trivial attempt to solve what is a much bigger problem.
Whilst these reliefs may not be significant enough to resolve all of the challenges faced by the licensed sector overnight, they are a step in the right direction. The implementation of these measures is yet another acknowledgement, at one of the highest possible levels, that the hospitality sector, as an extension of the high street, is an essential part of the UK economy.