Britain’s biggest pub groups rose after Chancellor of the Exchequer Jeremy Hunt froze alcohol duty, in a move designed to support bars and brewers.
Marston’s Plc shares rose 2.3% while Fuller Smith & Turner Plc was up 2.2% and J D Wetherspoon Plc 1.7% after the announcement that alcohol duty would be frozen until August next year, at a time when businesses are grappling with above-target inflation. Small pubs will also benefit from measures to reduce business rates, a divisive property levy.
“This is now one less additional cost venues have to worry about,” said Kate Nicholls, the chief executive officer of UKHospitality.
“Having already seen a headline duty increase in August, a further rise would have been a hammer blow to the sector,” said Phil Whitehead, managing director for Western Europe at Molson Coors Beverage Company.
The chancellor also announced a 9.8% increase in the National Minimum Wage, taking the lowest paid workers to £11.44 ($14.29) per hour from April next year. It was higher than some businesses had been expecting, according to Phil Urban, the Chief Executive of Mitchells & Butlers Plc. “It’s good news for the team and some will come back through the tills,” he added.
According to Emma McClarkin, Chief Executive Officer of the British Beer and Pub Association, the rise in the living wage will add more than £240 million to pub wages.
UKHospitality said it was disappointing that a 2% cut in National Insurance for employees was not matched with a similar reduction in the employer contributions, but Nicholls added that a tax cut for millions of workers would provide a boost to the sector in the New Year, often a quieter time for bars and restaurants.
Business Rates
The freeze in business rates for smaller and independent businesses drew mixed reactions. Coupled with the freeze in alcohol duty, the pub sector will save £350 million a year, according to the British Beer and Pub Association. However, two thirds of the hospitality industry will still face an increase in business rates of £150 million, according to Nicholls.
Larger high street businesses that will not benefit to the same extent railed against the business rates system — a tax on property that’s opposed by many bricks-and-mortar retailers. “The chancellor is now letting the tax spiral out of control, driving up costs just as retailers’ efforts to curb inflation have started to bear fruit,” said Helen Dickinson, head of the British Retail Consortium.
“Under the current system retailers with stores, which provide millions of high-value jobs, will be hit with an additional £480million bill in April, while online-only businesses remain significantly under-taxed,” said Alex Baldock, chief executive officer of retailer Currys Plc.
--With assistance from Katie Linsell.
