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< Back to news 08 March, 2016

The Budget: what the hospitality industry needs.

As English Tourism Week starts and The Budget quickly approaches we are calling for more clarity on alcohol policy and a rethink from the Government on Tourism VAT, to enable the industry to thrive, amid market pressures.
  • Price increases of up to 4% are already being implemented by hospitality suppliers, with National Living Wage quoted as a key influence
  • High rate of Tourism VAT already making Britain’s holiday hotspots uncompetitive versus its European counterparts
  • The beer and wine sectors are calling for another cut to alcohol duty this year

Last month saw calls from the beer sector for the Chancellor to cut duty in this year’s Budget[1] claiming that the three previous cuts to duty have supported almost 900,000 jobs across the country and contributed £22bn to the UK economy. In further support, The Wine and Spirit Trade Association claims a 2% alcohol-duty cut in the March Budget will support the growing demand for wine and spirits in the on-trade[2].

However, recent price increases from Heineken, Diageo and Molson Coors by an average of 3p per pint, have already added 5p-10p per pint at the bar[3], with many suppliers quoting the impact of the National Living Wage, which comes into force next month, as a key influence on price increases of around 4%.

Managing Director at Beacon, Paul Connelly says;

“The hospitality industry is under huge pressure at the moment and the next few years could be crucial. We are already seeing price increases from suppliers in order to offset the impact of the National Living Wage (NLW) coming into force next month as well as the anticipated roadmap to 2020 which will bring the NLW from £7.20 and rise to £9 an hour by 2020. We know that NLW impacts out industry disproportionately and our customers have told us they are already struggling to afford the change without passing on price increases to their customers.

“It is also a very real possibility that the Drink Drive Legislation that came into effect in Scotland in 2014 will come into force in England in the near future[4]. Whilst we are in favour of safer roads we know an increase in price of alcohol and a reduction in limits will drive people away from their local pubs, hotels and bars, to drink in their homes, further damaging the industry. Having spoken to our customers in Scotland we know that in the first six months of implementation this change had a huge impact on the hospitality industry – up to a 90% drop in alcohol sales in some cases[5].

“The hospitality industry is one of the largest contributors to the UK economy. Our concern is that if The Government does not take this industry seriously in The Budget next week, they are risking significant damage to a multibillion pound performer year after year.”

We are also working closely with sister company, Best Western Great Britain, to urge the Government to reduce the current Tourism VAT rate of 20% - almost double the European average. This means that Brits or international visitors choosing to holiday in Britain will be subject to almost three times as much VAT compared to a French or German break, and double that of a holiday in Italy or Spain.

Connelly continued: “A reduction in Tourism VAT would boost GDP by £4bn a year, create 120,000 jobs and deliver £3.9bn to the treasury. We strongly believe that this needs to happen to help hospitality businesses compete in the European marketplace.

For more information about Beacon and how we can help your business please click here or follow Beacon on Twitter @Beacon_YPP. 

References:

[1] http://www.foodmanufacture.co.uk/Regulation/Drinks-industry-calls-for-beer-duty-cut
[2] http://www.morningadvertiser.co.uk/Drinks/Wine/WSTA-Government-alcohol-duty-cut-to-support-pubs-distillers-vineyards
[3] http://www.mirror.co.uk/news/uk-news/beer-price-rise-10p-pint-7192735
[4] http://www.dailymail.co.uk/news/article-3439677/England-follow-Scots-lowering-drink-drive-limit-Ministers-set-consider-trial-successful-following-pressure-road-safety-campaigners.html
[5] http://www.digitalnewsroom.co.uk/beacon/scottish-drink-drive-legislation-6-months-on/