There had been very little leaking from the Treasury ahead of the Spring Statement and no-one thought that this was because previously issues about whispering had been resolved. It was because there was nothing to tell.
The sector is still very much recovering from the impact of a pandemic which is not yet over. But it is over for Rishi Sunak, who said that he’d been very supportive, but that it was time to pay back the money borrowed.
It’s not. VAT will go up to 20% as planned. The National Insurance increase will go ahead as planned (with some fiddling around the edges - the threshold will increase by £3,000 this year, up from a planned rise of £300, but it appears that the threshold for employers is not increasing). There was the promise of a cut in the basic rate of income tax from 20 pence in the pound to 19 pence, but only in 2024 and only if the economy can sustain it.
The sector - and its customers - are facing staggering rises in the cost of energy. It is already struggling with other cost increases and a lack of labour. It is not strong enough yet to support itself.
Sunak said: “We should be prepared for the economy and public finances to worsen.” If only - many of us were thinking as we watched him - there was someone who had the power to act.
Commenting on Chancellor Rishi Sunak’s Spring Statement, Graeme Smith, Managing Director at AlixPartners, said: “This is a significant moment for hospitality and leisure businesses. The removal of VAT relief and the absence of other meaningful interventions today by the Chancellor means that the last vestiges of Covid support are falling away. The timing of this as companies deal with unprecedented and, by any measure, extreme cost inflation pressures, will not be lost on anyone in the sector.
“We are now entering a period when management teams will necessarily be required to understand their businesses at a forensic level and manage margins in real time, so as to best mitigate this pressure. Those businesses that have invested in this complex discipline will clearly have a huge competitive advantage. Understanding what levers to pull, when and to what extent will be critical as businesses seek to navigate their way through what will clearly be a testing time.”
Rishi won’t act, so, yet again, the sector is on its own.