New chancellor Jeremy Hunt has announced that the majority of measures in his government predecessor Kwasi Kwarteng’s mini-budget will be reversed, in an attempt to stabilise the financial markets.
Several of the new proposals will affect the hospitality sector. Last month, the government announced it would cap the typical household energy bill at £2,500 for two years. However this has now been reversed, with the Chancellor stating that the energy price guarantee will now only last until April next year, followed by a review to design a new approach “that will cost the taxpayer significantly less than planned”.
A planned 1p cut in basic rate of income tax has been put on hold indefinitely and the rate will remain at 20 per cent. A VAT-free shopping scheme and an alcohol duty freeze will also be scrapped. The government’s reversal of the National Insurance increase and the Health and Social Care Levy, and the cuts to Stamp Duty Land Tax, will remain in place. And the £1 million Annual Investment Allowance, the Seed Enterprise Investment Scheme and the Company Share Options Plan will also continue, to support business investment.
In response to the statement from the Chancellor this morning, UK Hospitality CEO Kate Nicholls said:
“Given the economic volatility we have seen over the past few weeks, we understand the need for the Chancellor to announce these measures today, designed to deliver stability and restore confidence. I would encourage the Government to work with the UK’s hospitality sector to unlock its enormous potential to support our economy in delivering growth, creating jobs and driving the recovery.”
“Prior to the energy crisis, which is proving to be so devastating, the sector was forecast to grow by three per cent and there is still a real desire from our dynamic hospitality businesses to return to those levels of growth. However, the hospitality sector is so exposed to this crisis and has been devastated by it, which is why the energy support provided by the Government to help weather this storm, remains critically important and will help protect a vital industry. It’s essential that the government continues to work closely with the sector as part of its review into support post-April 2023,” she said.
“One area in dire need of urgent reform is the business rates system, which is currently not fit for purpose and places an unfair burden on hospitality businesses. This is particularly pressing now, given the additional costs hospitality businesses will now be facing as a result of the freeze on alcohol duty being scrapped,” Nicholls added.
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