In a speech yesterday, chancellor Rachel Reeves refused to rule out tax rises in the forthcoming Budget.
Setting the scene, Reeves said that she will “make the choices necessary to deliver strong foundations for our economy”, but she added that since the last Budget, “the world has thrown even more challenges our way”.
She said: “The continual threat of tariffs has dragged on global confidence, deterring business investment, and dampening growth. Inflation has been too slow to come down as supply chains continue to be volatile - meaning that the cost of everyday essentials remains too high.”
There has been widespread speculation since the speech that Reeves could put up the basic rate of income tax. But the details – of this and the rest of the Budget – won’t be revealed until 26 November.
She said: “As I take my decisions on both tax and spend, I will do what is necessary to protect families from high inflation and interest rates, to protect our public services from a return to austerity and to ensure that the economy that we hand down to future generations is secure, with debt under control.”
Industry under pressure
The foodservice and hospitality industry is no doubt waiting for November 26 with bated breath, after the last Budget proved to be a blow for many in the trade. A recent survey from a group of industry bodies including UKHospitality and the BII, revealed that one-third of hospitality businesses are operating at a loss. The survey also found that 63% had reduced hours available to staff and 76% of hospitality operators reported having to increase prices.
Following Reeves’ speech, Steven Alton, chief executive of the BII, said on LinkedIn: “More taxes will simply deliver further unnecessary failure resulting in 35% of pubs closing their doors for good and worsening our national economic position.” He urged people to write to their local MPs in a bid to save local pubs. He emphasised their contributions to both the community and the economy.
Wine and spirits businesses, too, have called on Government to scrap planned duty hikes and “avoid more prohibitive price rises, which will further fuel inflation”.
In a statement from industry body the Wine & Spirit Trade Association (WSTA), businesses said that if Reeves ploughs on with plans to increase duty by RPI in this month’s Budget, at an estimated 4.5%, consumers will be landed with further price rises, adding 14p on a bottle of Prosecco, 16p on a bottle of red wine and 47p for a bottle of gin.
The WSTA said alcohol businesses are still reeling from tax hikes introduced in February, but on top of that a “costly new glass tax, known as EPR”, has come into effect.
“Add to this the rise in National Insurance, minimum wage hikes and reduced business rates relief, the wine and spirit sector finds itself in a perfect storm of crippling costs,” the WSTA said.
Angus Lilley from Penfolds owner Treasury Wine Estates added that community pubs, restaurants and wine retailers are already under pressure.
“Further tax increases will only deepen the pressure,” he said. “Higher costs mean tougher choices for local pubs, higher prices on the menu, and less money flowing through the hospitality sector that keeps towns and cities vibrant.”
Ahead of the Budget, UKHospitality is urging the trade to join its #TaxedOut campaign, as it calls on Reeves to lower business rates, fix National Insurance changes and cut VAT on hospitality. There are a range of letter templates, social media tools and posters here.
Suppliers, consumers and hospitality employees can also use the BII’s letter templates to write their MPs here.
