What the Budget means for hospitality

Rates and relief

When the Survey asked leaders about the most-needed sources of government support, two in three (65%) singled out rates reform as a priority area. As expected, the Chancellor confirmed that relief of 40%—a lifeline to some operators lately—will end in April. Bills on properties with a rateable value above £500,000 will now rise sharply, and more problems lie in store with plans for new valuations. A transitional relief package of £4.3bn will cap increases until 2029, but a slow-drip impact means all businesses will be paying the full rate by 2029.

On the face of it, smaller sites may feel some benefit on rates, as the Budget introduced a 5p discount for individual retail, hospitality and leisure business properties with rateable values below £500,000. NIQ’s Hospitality Market Monitor shows how independent pubs, bars, restaurants and other licensed premises have been more vulnerable to closure in the last few years, so the government has obviously targeted this support. However, relief is well short of levels leaders had called for, and UKHospitality predicts the new rates package will leave hospitality substantially worse off.

Licensing and late-night

News in the Budget that licensing laws will be relaxed in ‘hospitality zones’ should make it easier to convert empty properties, acquire licenses for al fresco or late-night trade, and protect music venues from noise complaints.

The Night Time Economy Market Monitor from NIQ and the Night Time Industries Association (NTIA) has set out the need for help like this. Britain’s late-night economy has contracted by 4.6% in just 12 months, and by 28.0% from the pre-COVID levels of March 2020, with footfall hit by a powerful mix of changing leisure habits, rising costs and concerns over safety and public transport. In this context, support for new hubs might help to draw people back to late-night venues—though the NTIA has called the Budget a “hammer blow” overall.

Tourist tax

The Budget grants councils and mayors new powers to introduce overnight visitor levies, which are likely to be £1 or £2 per night, or a percentage of room value. The Tourism Alliance says these may impact the visitor economy, but with levies now common worldwide, the new tax doesn’t seem likely to deter many tourists.

National Living Wage

Alongside rates, the Business Confidence Survey highlighted wage levels as a top barrier to growth. It is now confirmed that the National Living Wage will rise again in April—by 50 pence to £12.71 for those aged 21+, by 85 pence to £10.85 for those 18 to 20, and by 55 pence to £8.00 for under-18s and apprentices. This might put more money in consumers’ pockets and boost spending, but a freezing of tax thresholds will create fiscal drag and reduce some of that benefit. Most importantly for hospitality, it is another substantial cost hike that UKHospitality estimates will be worth £1.4bn.

Economic forecasts

Another important announcement from the Chancellor was the downgrading of growth forecasts—a signal that macroeconomic conditions are going to remain challenging in 2026. Predicting what all the Budget measures will mean for hospitality is very difficult, and we will get a better impression of impacts in NIQ’s sales measurement data and the next Business Confidence Survey.