Autumn Statement 2023: the industry reacts

Chancellor Jeremy Hunt has unveiled the government’s latest tax and spending plans in what he dubbed “an Autumn Statement for growth”. The Autumn Statement, which included announcements around business rates for small businesses, alcohol duties and the National Living Wage, delivered “the biggest business tax cut in modern British history,” he said.

Here’s how the food, retail and hospitality sectors responded to the headlines.

Business rates updates

Relief extended for small businesses

Some of the most significant announcements for small businesses came in the form of an extension of the 75% business rates discount for retail, hospitality and leisure industries in England, and a freeze of the small business multiplier.

“Business rates are one of the absolute worst taxes faced by small firms,” said Tina McKenzie, policy chair at the Federation of Small Businesses (FSB). “Size matters when it comes to rates, and the chancellor is absolutely right to have concentrated his firepower on helping the smallest firms at the heart of so many communities.

“Thousands of pubs, cafés and small shops in high streets across England will be pleased today with the bold, measured and targeted support from the chancellor to help them through troubled times and build towards growth.” She added that the FSB’s teams in other UK nations will be pressing their devolved governments to extend similar support. 

“Meanwhile, by acting to help small businesses with premises through freezing the small business multiplier, the government has prevented an inflation-linked hike for many of those in the supply chain and other sectors too,” she said.

The chancellor said the extended measures will save the average independent shop over £20,000 and the average independent pub over £12,800 next year.

Medium and large retailers ‘sold out’

However, the Scottish Retail Consortium’s director David Lonsdale noted that the chancellor failed to commit to a freeze of the headline business rate. “This short-sighted decision means the medium-sized and larger retailers across the UK who underpin the vitality of our town and city centres and employ the vast majority of retail workers are now staring down the barrel of a hefty £540 million hike in their business rates bills from next spring.”

Helen Dickinson, CEO of the BRC, added that retailers and customers had been “sold out” by the chancellor’s statement, “which does not do enough to support shops, shoppers, and an industry that employs over three million people, and many more across its supply chains. As we enter the Christmas period, this Autumn Statement will serve only to renew inflationary pressures that ultimately harm households.

“The country needs wholesale reform of our broken business rates system,” she added. “Retailers pay over £7 billion a year in business rates – over 22% of the total raised by the tax. This must not continue; it is imperative that we see parties commit to reforming the broken business rates system in their manifestos for the next general election, and to lowering the disproportionate burden that this tax has on the retail industry.” 

National Living Wage to rise

The National Living Wage will increase to £11.44 in April 2024, rising from its current rate for £10.42. What’s more, this rate will also apply to 21- and 22-year-olds from April. 

“This is a significant increase in the National Living Wage, rising 10% and 28p more than originally forecast,” said UK Hospitality chief executive Kate Nicholls. “Such a rise will have significant knock-on impacts on costs as businesses struggle to maintain appropriate wage differentials across all of their staff, including at more experienced levels.

“If businesses are expected to deliver these wage levels, there must be action to drive down costs in other areas,” she said.

Alcohol duty frozen

The chancellor also announced a freeze in the alcohol duty across all alcohol categories.

Miles Beale, CEO of the Wine and Spirit Trade Association, said the news “comes as a huge relief to wine and spirit businesses and the hospitality sector who have taken a battering over the last few years”.

However, he added that the introduction of a new alcohol tax regime in August has led to “a worrying decline in sales” and the industry has ongoing concerns about the impact of this. “We implore the chancellor and his team to lock in the freeze until at least the end of this Parliament. This will keep people in jobs and mean consumers will still be able to enjoy a drink at a price they can afford.”

Ed Baker, managing director at Kingsland Drinks, agreed, adding, “The recent August 1st increases are making the UK consumer pay some of the highest alcohol taxes in Europe which are now filtering through to higher pricing for them and lower sales for us; an additional rise would have damaged our industry even further.”

The Scotch Whisky Association also welcomed the news as it said distillers large and small are being hit by cost pressures. However, its CEO Mark Kent added that under the current duty system, Scotch whisky is put at a disadvantage, “based on a fundamental misunderstanding of how people consume alcohol and modern drinking trends”. 

He said, “We want to continue the discussion with government about how the tax system can more closely reflect the number of units in a typical drink, rather than the strength of the finished product. Despite today’s duty freeze, cider is still taxed four times less than a spirit like Scotch Whisky – this is not fair and cannot be justified.”

Cut red tape to unlock innovation

Karen Betts, chief executive of The Food and Drink Federation welcomed the Autumn Statement. She said making full expensing permanent in particular would help to “incentivise the investments necessary for companies to innovate and grow, and to continue to provide shoppers with high-quality, nutritious and affordable food and drink.”

“While the focus is on headline tax rates,” she added, “it’s vital that government looks at regulation too, which is driving unnecessary and increased costs onto company bottom lines, deterring investment and adding to cost of living pressures for households. This is particularly true as the UK establishes a circular economy, which it’s possible to do at a lower cost and in more efficient ways, as demonstrated by other, competitor economies.”

What does the Autumn Statement mean for your business? Get in touch with your thoughts: courtney.goldsmith@artichokehq.com