Managing Director of Mangrove Global and outspoken industry commentator, Nick Gillett, has provided his reaction to the Labour Government’s Autumn Budget. With doom and gloom forecast by the media well in advance of the Budget’s publication – the new fiscal regime was never expected to be "good for business". That said, there will be many in the hospitality and spirits industries wondering exactly how they’ll manage when the bulk of changes take effect in April next year. Nick says it’s an age-old tale of the government introducing more costs and offering no assistance:
“Prior to the Budget being announced, I said the best we could hope for as an industry was to be left well alone. But sadly, that was a pipe dream.
“And whilst the unprofessional trailing of details hinted it was going to be a lot worse than it was – it’s still nothing to shout about. A vast increase in employment costs, rises to alcohol duty for spirits, and a lessening of the rates relief currently available to the hospitality sector, means that more businesses are bound go under.
“Since Covid and Brexit, many companies have never fully recovered, continuing to operate on the slightest of margins – and these added costs and lessening of support will be the final nail in the coffin for many.”
Since Covid, the Hospitality, Retail, and Leisure sectors have received significant business rates relief to help bolster the struggling sector – in the last few years the relief has remained at 75 per cent. This was hard fought for by industry lobbyists such as UKHospitality, in an attempt to protect businesses and employees alike. In the last Autumn Statement the Conservative Government extended the relief by another year, and still 50 venue closures a month were reported in the first six months of 2024. The latest Budget marks the end of the current relief, with a reduction to 40 per cent confirmed for April 2025.
He added: “To fully understand how damaging this is for hospitality, you need to go way back. The sector was first struck by Covid and the lockdowns. It was hit by increasing costs in alcohol, thanks to increased duty and bureaucracy. Cost of living continues to reduce disposable income and custom. And Brexit has forced out swathes of the workforce that was the lifeblood of the industry.
“Now, the Government continues to pile on costs – and we’ll need to wait and see if any of this actually increases the public’s spending power by putting more money in their pockets. One thing that is for sure – the only way businesses will survive is by increasing prices. And that will have an added effect on inflation.”
The Autumn Budget also detailed a mixed bag of changes that will affect spirits producers - including alcohol duty. Whilst duty on alcoholic drinks served on "draught" will reduce by 1.7 per cent, wine, spirits, bottled beers, and cider will see duty rise by retail price inflation. Both the lower and higher rates of the soft drink levy will also increase to £1.94 and £2.59 per ten litres respectively. Not only will this push up the price of tipple for great British drinkers, but it will also stifle growth.
“Previous, recent rises in alcohol duty have shown that the rise is passed onto consumers, leading to fewer sales, and less money raised for the treasury. So, to confirm another rise seems illogical," Nick continued.
“But let’s get this straight. The hospitality and spirits industries are bursting with talented, creative, and entrepreneurial people. Where these businesses thrive, local economies succeed.
“As much as the Government’s Budget hasn’t gifted us any giveaways, I have no doubt the industry will pull together, weather the storm, and come out the other side. All off the back of the exceptional people behind it.
“And when that happens – the UK economy will once again reap the benefits our success, as it always does.”
