“Extension to VAT was essential to long-term planning and security” Hoteliers speak out on Budget


Hoteliers have given mixed reviews to the Chancellor’s Budget announcement and stressed that the ‘devil will be in the detail’ when the changes come into effect.

Yesterday Chancellor Rishi Sunak detailed his 2021 Autumn Budget in Parliament, which includes the extension of the 50% business rates relief for the hospitality and leisure sector for the next financial year and plans to reform alcohol duty.

While much of the news was welcomed by the hospitality industry, some leaders had their doubts over their impact and many were concerned that an extension to the 12.5% VAT had not been included in the Budget.

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Alasdair Elwick, general manager at The Forest Side in the Lake District said: “As ever the support of the Government is welcome, However I am saddened not to hear about an extension to the VAT, In my view this was essential to the long term planning and security of our industry, So many business regardless of size are working tirelessly to protect what they have, at the same time as nurturing and developing their teams, The VAT extension would have allowed business’s to forecast effectively to enable a sustainable future for us all.”

Danny Pecorelli, MD at Exclusive Collection, which includes South Lodge, Pennyhill Park, The Manor House, Lainston House, added: “Delighted that there is an acknowledgment that hospitality has been through a tougher time than many sectors. The rates relief is very welcome prior to hopefully some meaningful reform. The devil will however be in the detail as it is capped so as always with recent government announcements the headline isn’t always the reality.”

More regular revaluations on business rates will also be adopted, with businesses assessed every three years from 2021, and new investment initiatives also introduced. Investment relief will be available to businesses who install green technologies such as solar panels as well as a business rates improvement relief.

Sunak also confirmed an increase to the National Living Wage to £9.50 an hour and a £3.8bn rise in spend on adult skills including expanding T-Levels and increasing funding for apprenticeships.

Dean Clayton-Madge, head of Sales & Commercial for Red Hotels, said: “Whilst we welcome the news on the minimum wage increase, we have as a company already increased our hourly pay to a minimum of £11.00 per hour. Now is the time to recognise the great contribution our team will make too our long-term success and it with increased living costs for all our team we are further committed to ensuring that we provider development to those team who express an interest which in turn enables them to grow future pay and job satisfaction.” 

Nick Bannister, director The Coniston Country Hotel & Spa commented: “For our own hotel and hospitality in general, we welcome many of the announcements made in the budget today, including the 50% discount on business rates and the reform of alcohol duty, which will be a big benefit to our industry. We are however concerned about inflation and the higher national insurance costs for both ourselves and our employees in what is still an uncertain time, and are disappointed that an extension of the lowered VAT rates was absent. As a family owned business with people at the heart of what we do, we are delighted that the Government will increase spending on adult skills and training, allowing us to invest in and strengthen our fantastic team. Finally, the big highlight for us was the announcement on the reformation of business rates, in particular the 12 month relief for firms to invest in their premises.”

UKHospitality’s Chief Executive, Kate Nicholls, added: “We have been lobbying hard for significant reform of the outdated business rates system and therefore very much welcome the Chancellor’s move today to extend the 50% business rates relief for the hospitality and leisure sector for the next financial year. The devil will be in the detail, though, so we look forward to learning to what extent it will benefit businesses.

“Positive as these announcements are, hospitality remains incredibly fragile, facing myriad critical issues. Rising utility bills, wage bills and food and drink prices have resulted in 13% inflationary costs that businesses are having to absorb at the same time as they navigate severe supply chain issues and chronic staff shortages. Given this toxic cocktail, it is imperative the Government go further to support businesses in our sector.

“The most effective way to achieve this would be to maintain the current lower 12.5% of VAT for the sector. The Chancellor has been bold and radical with alcohol duty – we urge him to adopt the same approach when implementing root and branch reform of business rates, to ensure industries share the burden equally.”

Tags : budgetbusiness ratesChancellorRishi SunakVAT
Zoe Monk

The author Zoe Monk

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