Cushman & Wakefield's experts offer their insights on the Chancellor's 2021 Budget.
Jonathan Hubbard, Head of Hospitality for EMEA comments: “Whilst there are a number of measures announced today that will undoubtedly continue to help the UK hospitality sector, in reality they barely scratch the surface of actions needed to address the real challenges ahead for hospitality businesses. The various measures, such as the welcome extensions of the furlough scheme, the continued business rates relief and the retention of 5% VAT until September (rising then to 12.5%), as well as business restart grants, only go a little way to support the industry which has suffered more than most as a result of COVID-related lockdowns and international travel restrictions. The challenge facing the UK hospitality industry is substantial and this can only form part of the solution. Let’s hope that the campaign to appoint a Minister for Hospitality, to give a voice to the sector, is successful and with increased government focus, meaningful action can be taken to bring in hospitality revenue, safeguard jobs within hospitality and in wider the supply chain and increase investment.”
Mike Flecknoe, Head of Rating comments: “English ratepayers currently receiving 100% rates relief within the Retail, Hospitality and Leisure Sectors will welcome the extension to 30 June of the relief. The 66% relief thereafter is capped at £2 million per business and limited to those properties that were forced to close on 5 January. This additional relief will not go far for larger businesses but will undoubtedly help smaller ratepayers.
"Restart Grants of up to £6,000 per property for non-essential retail and £18,000 per property within the hospitality and leisure sectors will be warmly welcomed. Interestingly local authorities will also be provided £425 million of discretionary business grant funding for ratepayers outside of retail, hospitality and leisure.
"It is also positive that the Treasury confirmed that where businesses have paid back any rates relief, it will be deductible for corporation tax purposes. Consequently, they will not be penalised for paying back the relief.
"As much as the Budget announcements on business rates are welcome, it still leaves many sectors unsupported and paying full rates during the COVID crisis. Their only potential solution is concluding material change rating appeals which may generate backdated rate refunds. However, the appeal process means delays during a time when many businesses need support.”
Leisure & Restaurants
Matt Ashman, Head of Head of Leisure & Restaurants comments: “I’m confident in the latent restaurant & leisure customer demand – people want to get back out and enjoy themselves as soon as is humanly and safely possible, but I’m unsure if today’s headlines will be enough to support the long-term changes required. A 5% reduced rate of VAT for the sector until 30 September is welcome, but only allows indoor trading for just over 4 months (from 17 May) before being increased to 12.5% for another six months (March 2022). Likewise, the business rates holiday continuing to June, then a third payable for the rest of the year helps, but pushes down the road the need for an overhaul tying in an online tax to level the playing field.
“While together these measures should result in substantial reduction in operational costs and increased profits, which in time will help mitigate some of the losses over the last year, it is a shame not to see a reintroduction of a similar wider scheme such as Eat (or Seat) Out To Help Out which will help drive business, rather than just save costs.”
Yorkshire & North East
Keith Hardman, Managing Partner for Yorkshire & North East comments: “Yorkshire and North East receive major Budget boost with a host of investment proposals including the announcement that the UK Infrastructure Bank is to be located in Leeds. This is welcome news for the city and builds on Leeds reputation as a financial centre of excellence – the city is home to a substantial cluster of banking - with 30 national and international banks, accountancy with 150 firms including the Big Four, and a growing insurance sector. The Infrastructure Bank will add further to Leeds aim to develop as a leading location for fintech and insuretech – the city secured the UK's first fintech accelerator outside of London. The UK Infrastructure Bank is also clear evidence of investment in the levelling up agenda where additional steps and measures announced specifically for the Yorkshire and North East Region include:
• Two new Freeports based in Humber and Teesside out of a total of 8 for England
• A 'new economic campus' to be set up in Darlington, where The Treasury and several other Government departments will be involved
• £199million of Towns Funding confirmed for Yorkshire and Humber for towns including Wakefield, Whitby, Scarborough, Grimsby, Scunthorpe and Castleford
• Middlesbrough and Thornaby-On-Tees to receive £46 million from the Towns Fund
• £150 million to progress A66 Trans-Pennine upgrade
"The region also stands to benefit from the £4.8 billion UK-wide Levelling Up Fund, the prospectus for which was published yesterday. This provides guidance for local areas on how to submit bids for the first round of funding with applications for the first round due in by mid-June this year. The first bidding round of the Fund will focus on three themes: smaller transport projects that make a genuine difference to local areas; town centre and high street regeneration; and support for maintaining and expanding the UK’s world-leading portfolio of cultural and heritage assets.
"It's particularly noteworthy that emphasis is being placed on projects with delivery time frames in the short to medium-term - in the first round of funding priority projects are those able to demonstrate investment or starts on site by 31 March 2022. In subsequent bidding rounds, Treasury expect all funding to be spent by 31 March 2024, and by exception into 2024-25 for larger schemes.”
Jon Leedham, Managing Partner for the Midlands comments: “The Chancellor’s pledge for an ‘investment-led’ recovery will be welcome news to the business community.
“The announcement that one of the eight newly created freeports will be in the Midlands at East Midlands Airport will be a significant boost to inward investment, business growth and job creation. The Midlands region has a rich heritage of innovation and with a freeport, we can use these strengths to secure major employment and investment opportunities.
“Following hot on the heels of last week’s announcement that the Ministry of Housing, Communities and Local Government will be creating a dual headquarters in the city, it’s pleasing to see Wolverhampton being named as one of the beneficiaries of the 45 new town deals.”
“The extension to business rates relief for the Retail, Hospitality and Leisure Sectors is positive news although many sectors have been left unsupported and paying full rates throughout the pandemic.”
Tim Davis, Managing Partner for the South West comments: “The Chancellor’s Budget has pledged short-term support but has failed to address some of the long-term challenges brought about by the COVID-19 pandemic. The £5bn grants for non-essential businesses and business rates holiday are welcome but will only offer short-term assistance to get them back up and running. The support does not address the longer-term vitality of our town centres which are in massive decline from a retailing perspective. The pandemic has accelerated structural changes in UK retailing caused principally by the growth in online shopping and the government needs to consider how to rebalance the retailing ‘playing field’ in terms of the Business Rates review and the Sales Tax on internet retail sales. The announcement of an extension to business rates relief for the Retail, Hospitality and Leisure Sectors is welcome but many sectors have been left unsupported and have been paying full rates throughout the pandemic.
“I am also sceptical on whether the stamp duty holiday extension and mortgage guarantee proposals are really needed. There needs to be less focus on demand and more done to address the supply of affordable homes. Serious consideration needs to be given to enabling local authorities, housing associations and other providers to build more homes themselves and possibly extend Homes England’s remit to build houses in JV’s with suitable partners.”
Caroline Baker, Managing Partner, North West comments: “Having released a number of announcements in advance of the Budget there weren’t many big surprises in the Chancellor’s speech but clearly for a region that has suffered some of the most severe lockdowns across the country, the extensions to furlough, help to the self-employed, universal credit and business rate holidays are welcomed. The support for hospitality and tourism is much needed but will not go far enough for a sector so important to our region that has effectively be closed for year. Hopefully the success of the vaccine roll out and the ability to finally return to the much loved bars, restaurants and theatres across our region will support those businesses to bounce back.
“There is no doubt that the extension of Stamp Duty exemption and the mortgage guarantee schemes will keep the housing market moving but in my view the focus should have been more on delivering new homes rather than stimulating home ownership. The North West build to rent market is one of the strongest outside London and it would have been good to see more support to further stimulate this. Hopefully some of the stimulus for the green economy will find its way to delivering more energy efficient homes.
“Announcements on a number of funding bids were definitely welcomed (in particular the 9 towns in the North West being successful in accessing £211m of Town Fund and the Liverpool City Region Freeport). The relatively large number of North West authorities which have been identified as priority 1 categories to be able to bid to the Levelling Up Fund by June this year will also bring much needed investment in the region. However overall, the announcements on Levelling Up were underwhelming and we will need to see further support to ensure that the growing north-south divide is tackled to support the overall productivity of the country as a whole.”