Wednesday 3 March 2021 3:09 pm

Budget 2021: Pubs, restaurants and retailers toast Sunak's announcement but warn of gaps in support

The hospitality and retail sectors have welcomed the Chancellor’s extended support for pubs, restaurants, shops and salons, but said more could be done to encourage consumers back to the high street after lockdown. 

Rishi Sunak this afternoon announced measures including a business rates holiday extension, new “restart” grants, a VAT cut extension and a beer duty freeze to help the struggling sectors recover.

Read more: Budget 2021: Hospitality and retail firms to get £5bn of ‘restart’ grants

Much of the industry welcomed the announcement made in today’s 2021 budget, but warned that the measures were short-term and that more should be done to encourage shoppers back onto the high street from next month.

Paul Martin, UK head of retail at KPMG, said today’s announcement “recognise the devastating impact that the pandemic has had on the high street”.

However, he added that it was “disappointing not to hear the chancellor announce any big consumer initiatives to help the high street out more”.

“Encouraging both consumers and tourists to get out and spend from 12 April will be vital if we are to keep our high streets open”. 

Business rates

Sunak announced this afternoon that the business rates holiday for retail, hospitality and leisure firms will be extended at 100 per cent to June, with a cut of up to 66 per cent for the following nine months.

Emma McClarkin, chief executive of the British Beer and Pub Association said the extension of the business rates holiday could fail to help many businesses.

Read more: Budget 2021: Big business to pay off UK’s Covid debt burden with £45bn corporation tax rises

“We campaigned hard for an extension of the business rates holiday and the Chancellor announced a 100 per cent cut on rates until June and up to a 66% cut for the following 9 months” she said. 

“This is good news, but the proposed cap will mean many pub businesses will not benefit fully from this. We await to see more detail.”

Parcelhero e-commerce expert David Jinks said: “The holiday also simply kicks into touch the real issue: Britain’s business rates are horrific. 

“They are higher than in any nation in the EU. There needs to be a new solution, potentially one in which the property landlord, rather than the business occupying the premises, pays towards rates.”

John Webber, head of business rates at Colliers International, said the chancellor missed a “golden opportunity” on reform. 

He said the extension has not helped other sectors that have seen “genuine hardship”, including those that supply the retail, hospitality and leisure sectors.

Restart grants

Pubs, restaurants, non-essential retailers and salons will also be eligible for new restart grants to help them resume trading when lockdown ends.

“The new grants are worth £400m for pubs and will go some way in helping many of them survive through to the time when they can reopen and operate viably, McClarkin said.

Read more: Budget 2021: Self-employed grants extended to 600,000 individuals left behind

“It is, however, crucial that the Government ensures all pubs benefit, including those that are part of a group, by removing the current State Aid cap.”   

UK Hospitality chief executive Kate Nicholls said the grants are a “welcome boost”.

“The priority now is making sure that these grants find their way to the businesses that need them as quickly as possible and that interest rates are capped,” she said. 

“It is critical that government makes clear that EU State Aid rules do not apply to these grants.”

VAT cut extension

The BBPA said the extension of the five per cent VAT rate will be worth £485m to pubs, but warned that tens of thousands of pubs will not reopen until 17 May at a reduced capacity.

The industry body also warned that wet-led pubs will be “especially disappointed again that the reduction will not apply to all beverages so they too can benefit from this”.

Read more: Budget 2021: Sunak keeps VAT at reduced rate for hospitality and tourism firms

Kate Nicholls, chief executive of UK Hospitality, said the government should introduce the interim rate for the industry on a permanent basis.

She said: “It would be a positive legacy of an otherwise dreadful year for our sector. A permanent reduced rate of VAT for hospitality would redress the unfair tax imbalance that our businesses have faced for too long and make us internationally competitive.”

Beer duty freeze

Meanwhile, the planned beer duty rise has been scrapped in a bid to help pubs and restaurants recover from the pandemic. 

“A beer duty freeze will be seen as much needed short-term relief for the sector,” said the BBPA’s McClarkin.

Read more: Budget 2021: Beer duty increase scrapped

“However, the chancellor has only partially listened to the 500,000 campaign supporters who signed the petition calling for a cut in beer duty. 

“We now hope the government will use the ongoing Alcohol Duty Review to cut beer duty to support our brewers and pubs and level the playing field with other brewing nations. 

“The government must support and promote Britain’s extraordinary pub and brewing sector in the way other government’s support their domestic industries.”