UKHospitality: Budget booze – but not much else

Kate Nicholls, chief executive of UKHospitality, reflects on a budget that failed to spring many surprises...

In the run-up to the spring budget, the government endeavoured to manage expectations… and those lowered expectations were duly delivered upon, with little to write home about for contract caterers. Unsurprisingly, it focused principally on government objectives, including removing barriers to growth, halving inflation and reducing debt.

Even the one positive included came with a caveat – the reduction in draught beer and cider duty is alongside an overall increase in duty in line with inflation. In effect, then, draught beer and duty beer will remain at the same level as it is now, with wine and spirits seeing an increase. It’s positive that draught duty hasn’t increased, but this is a mixed picture for the wider drinks market.

The other duty freeze, on fuel, together with the extended energy support for households, could mean increased disposable income for consumers, leading to higher footfall for venues in desperate need of trade. Fingers crossed on that, but it will take time to trickle through – time that not all long-suffering businesses in our sector can rely upon.

But other than measures to boost the workforce – something this industry is desperate for – UKHospitality’s two other key pre-budget asks were, rather frustratingly, ignored. There was no VAT rate reduction for our sector and no energy support for businesses.

This last issue is crucial, because thousands of venues will be left teetering on an energy cost precipice come April, when support falls away dramatically. So, while contract caterers aren’t likely to be affected directly, they could feel some of the knock-on financial pain set to be suffered by their clients. Budget aside, then, UKHospitality will be continuing to urge both OFGEM and the government to deliver swift action to alleviate energy cost pressures.

As I say, there was happier news on the workforce front. As the hospitality industry struggles with vacancies running at 56% higher than pre-pandemic levels, budget measures to incentivise people back to work are vital.

Indeed, the significant reforms to childcare and measures to help over-50s re-enter the workforce are both areas in which UKHospitality has been calling for action, so we’re pleased that the chancellor has recognised this. Again, though, it will take some time before we can reap the benefit.

Further work is needed, though, when it comes to immigration. The Migration Advisory Committee published its report into the Shortage Occupation List (SOL) roles for hospitality and construction. This review particularly considered chefs, but did not ultimately recommend adding any hospitality roles to the SOL. A full review of the SOL is ongoing and UKHospitality will respond to it in full, having consulted with our members.

It was never going to be a short-term, solve-all budget, but we can take encouragement from the wider economic forecasts, including inflation falling to 2.9%. That, and other factors mentioned above, point to a long-overdue upturn in consumer confidence and spending, albeit in the long- rather than the short-term.

And we’ll be reflecting on whether that’s been the case at UKHospitality’s annual summer conference on 14th June, where there will also be in-depth discussion and expert insight on all the issues facing the sector at the moment. We’d love for as many operators to join us as possible, so please take a look at our website to book your place.

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