A closer look at what Rishi Sunak’s Budget means for restaurants

The Chancellor Rishi Sunak went some way to supporting the hospitality industry in his Budget. It was mostly as was expected, with an extension to the VAT cut, the business rates holiday, and the furlough scheme.

He froze alcohol duty for a second year, and avoided a controversial second Eat Out to Help Out scheme. Sunak also announced restart grants of up to £18,000 to help restaurants and pubs return to trade.

The super-deduction capital allowance is also a critical step and a crucial time – this will help small businesses.

Finally, the Treasury’s late-in-the-day move to increase the state aid cap from £3m to £10.9 (this cap had previously prevented bigger chains to access grants) was also a victory. It came yesterday, after lobbying from the industry, including from us at Harden’s.

These safety measures provide ample and rigorous protection to vast swathes of the industry, but here we’ll look a little more closely at the holes left behind…

The foremost issue is rent, which we have flagged before and which was obtusely ignored and/or avoided by the Chancellor. We need not go into the problems faced by the sector again, but it seems rent debt, ever mounting, is not something the Government wants to help out with. The commercial lets moratorium, as it stands, is still set to slide on March 31. Let’s hope Sunak steps up.

We have an extension to the VAT cut. The Chancellor reduced VAT from 20 to 5 per cent last year and it is by and large a big positive. But many were calling for this mechanism to be applied to alcohol sales too given so many wet-led pubs risk being left behind. It was not, which is disappointing for small pubs with limited resources.

We have an extension to the business rates holiday, but this will instead move to a two thirds discount in July. It will also be capped at £2m. This means big chains like M&B and Pizza Express will face bills worth millions as they’ll have to pay any sum in excess of £2m, which to medium to big companies is significant. Such payments having traded profitably for only a month (since June) is not wholly welcome. Harden’s has been told by a number of CEOs that this could well dampen investment plans and hinder the development of new jobs – as we know, hospitality will have a massive part to play in the UK’s economic recovery. We think they should’ve been offered more breathing space by the Chancellor.

The Job Retention Bonus announced in the summer, which would have seen the Government pay employers £1,000 for each member of staff retained until the end of January, has seemingly slipped away… maybe Sunak and his pals thought coronavirus would be all but over by now. The money we can’t imagine will ever arrive.

So there we have it. A mixed bag – one that is positive, nurtures and supports pubs and restaurants, but falls short in some ways. At a crucial and critical time, the Chancellor has moved to provide for entrepreneurs but it comes at a cost, and when looking at the bigger picture, the country’s recovery hinges hard and fast on the opening dates set out in Boris Johnson’s roadmap.

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