Avison Young Director, Andrew Wellens, looks at the impact of the Budget on Business Rates for the South West’s hospitality sector:
The challenges brought about by the Covid-19 pandemic have impacted upon the Hotel & Leisure sector more than most other business sectors in the UK. Avison Young’s UK Cities Recovery Index, which monitors the diversity of market activity and the speed and trajectory of the recovery, shows that the third lockdown is likely to hit hotel and leisure harder than any other sector. The Recovery Index has seen a sharp fall since further restrictions and then the third lockdown began, decreasing from 51.3 on the 24th Dec to 19.9 on the 1st March.
Bristol and the South West is one of England’s main tourist destinations and ahead of yesterday’s budget Avison Young had called on the Chancellor to grant a further 1-year extension from business rates for the traditional retail, leisure, and hospitality sectors.
The Chancellor did announce that the retail and hospitality sectors would receive 100% relief from business rates for three months from 1 April 2021, the amount of relief is then reduced to 66% for the remainder of the year. The additional relief is however severely restricted and capped at either £2 million for businesses that could not open on 5th January, or £105,000 per business that was open during the same time period, and this will have massive implications for the many businesses throughout the region operating from more than one property.
The amount of support available to ratepayers in England is considerably lower than Wales, where a £380m package has been announced, providing ratepayers in the retail, leisure, and hospitality sector a straightforward year-long business rates holiday.
Whilst the Avison Young UK Cities Recovery Index indicators show dramatic reductions to both the Bristol and Cardiff hospitality and leisure sectors because of the latest lockdown, the indicators for Bristol do indicate a greater fall than Cardiff. Despite this, it is the Welsh Government that appears to be more inclined to offer meaningful support to the sector whilst the Chancellor has announced a more restrictive package in England.
The Chancellor also confirmed that the UBR (uniform business rate) would be frozen for 2021/22 at 49.9p in England with the small business supplement remaining at 1.3p; and that it would also be providing all local authorities in England with an additional £425 million of discretionary business rates funding.
Whilst these announcements are in the main favourable, the Chancellor could have gone further and additional measures could have been announced, to assist the two-thirds of businesses that have been required to pay rates during the Covid-19 pandemic, despite being severely restricted on the extent they can occupy their properties. Furthermore, these businesses are not being supported by a slow-moving appeals system which is under enormous pressure, in part due to the many thousands of appeals that have been submitted to the Valuation Office Agency as direct consequence of the pandemic.