Trade amplifies pleas to new government
With a new day and a new government in situ in Westminster, the trade has reiterated the need for support for the UK’s struggling hospitality sector, with reform to business rates and permanently extending the duty easement both top of the agenda.
Labour’s win lived up to the polling forecasts by gaining a landslide majority in yesterday’s election (4 July), finishing with a total of 411 seats.
Now, many in UK drinks are hoping for a fresh start to boost both the sector and the economy, including the WSTA.
In a statement released this morning, the trade body called on the incoming government to support the growth of the UK wine and spirits industry, which supported 413,000 jobs and contributed £76.3 billion in economic activity in 2022.
Hospitality alone is the third largest employer in the UK. It accounted for 17% of the overall UK employment growth between 2009 and 2019, placing fifth out of 20 industries in terms of the total number of jobs created (Ignite Economics).
Yet the sector continues to face an onslaught of challenges. The incoming changes to duty on 1 February, when the easement is due to lapse, will see the introduction of up to 30 different payable amounts to wine and add between £2.45 to £3.10 per bottle.
Business rates relief is also set to end in April, while confusion over waste packaging regulations remain.
This situation could be ‘fatal’ for some businesses, particularly SMEs, the WSTA said.
“We are looking forward to working with a new administration that has rightly called for closer partnership between business and government to deliver economic growth,” Miles Beale, chief executive of the WSTA, said.
“It feels like a fresh chapter and a chance to move away from the increasingly disconnected and heavy-handed approach of the previous government towards a closer and more collaborative working partnership.
“Labour has pledged to support business with a stable policy environment and an approach to business taxation that allows long-term planning. We agree and are calling on new ministers to stick to these principles for the lifetime of the new parliament – starting with making permanent the temporary easement for wine duty and delaying the Extended Producer Responsibility (EPR) scheme to ensure it is fit for purpose.”
UKHospitality (UKH) is also adding to the chorus of reform. This morning, chief executive Kate Nicholls called on the Labour Party to deliver on its manifesto commitments to replace business rates and reform the Apprenticeship Levy in the first 100 days of government – a clear signal that the new government “backs hospitality as the central pillar of the everyday economy”.
She added: “Swiftly addressing business rates would fulfil a longstanding ask of the sector and avoid a cliff-edge in April, when current relief is set to end and rates are due to increase again. Hospitality, with its presence in every constituency, can act as a powerhouse for driving economic growth, creating new jobs and regenerating our towns and cities.”
In its manifesto, Labour committed to replacing the business rates system in England and level the playing field between high street businesses and online giants. It also pledged to overhaul the Apprenticeship Levy by creating a Growth and Skills Levy.
Reform to business rates has been widely welcomed as a way of alleviating one of the biggest financial burdens on UK businesses. However, other manifesto promises are causing concern.
Increases in staff costs loom as Labour pledged to remove age thresholds and increase the national minimum wage rates to consider the cost of living. This could see the rates jump nearer to the Real Living Wage levels, thus potentially squeezing margins and derailing recruitment plans.
Saxon Moseley, partner and head of leisure and hospitality at financial firm RSM UK, said the potential impact could be a “whopping increase in wages of over 50% for workers aged 18-20 in April 2025; and an increase of almost 15% in those aged 21 and over, which will acutely hit the hospitality sector and its staff. In addition, if planned changes to zero hours contracts come into play operators will have less flexibility and may have to draw on more expensive agency staff to cover illness, holidays and peak periods.”
As well as replacing the business rates system, Moseley suggests two other ‘quick wins’ which could help to boost the sector.
“Reduce the threshold for visas within hospitality roles to close the skills gap and help recruitment for key jobs such as experienced chefs which the industry is currently lacking. Also, cut VAT on food and drink sales to help businesses who have seen margins eroded in recent years,” he concluded.
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