Harrogate businesses fear ‘double economic blow' in 2022 despite support in Budget

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Now that the details of Chancellor Rishi Sunak’s spending plans have sunk in, the leaders of the town’s business groups say a series of underlying financial problems have yet to be addressed, in particular, the pressing issue of business rates.

In general, the Budget’s range of business boosts for the hospitality sector, in particular, have been welcomed in Harrogate, as elsewhere.

Highlights included:

A 50% business rate discount for pubs, cinemas, restaurants, gyms and other venues to be introduced for the 2022-23 tax year;

A “draught relief” will apply a lower rate of duty on draught beer and cider, cutting the tax by 5% on drinks served from draught containers over 40 litres and bringing the price of a pint down by 3p;

Alcohol duty is being “radically” simplified by introducing a system designed around the principle of “the stronger the drink, the higher the rate”;

A planned rise in fuel duty will be cancelled because of pump prices being at their highest level in eight years.

But David Simister, Harrogate District Chamber of Commerce’s chief executive, believes testing times lay ahead.

He said: “A stable economy with low inflation is what business always prays for, but I don’t think this will be the case over the next few years.

“Next year, a rise in National Insurance and the minimum wage will put added pressure on employers, and 2023 corporation tax will rise from the current 19% to 25%.

“The uncertainty in the cost of gas and electricity is also a worry, and one that in turn will help fuel a rise in

inflation.”

Sara Ferguson, Chair of Harrogate Business Improvement District (BID), agreed that tougher times were on the horizon - despite some good news in the budget.

She said: “Looking ahead, April sees a double hit for all employers with an increase in the minimum wage and a hike in National Insurance, which will also affect employees, too.

“To afford these, some businesses may be forced to put their prices up, which in turn will impact on customers. And just for the hospitality industry, which is currently charging VAT at 12.5%, April 1 2022, will see it reverting back to 20%. I am afraid to say, in many cases, businesses will have no choice but to pass on this increase to the customer.

“We also have the growing worry of rising fuel prices and in April 2023, corporation tax is set to rise from 19% to 25%, which is a huge hike.”

Among the list of worries not assuaged by the various support packages in the Autumn Budget, the thorny subject of business rates remains a major concern.

Mrs Ferguson said: “One of the major factors preventing business people from opening up on the high street are the extortionate business rates.

“A 12-month, 50% cut in business rates is good news, but it’s only a temporary measure. We all want to see a vibrant high street, and we want to see new businesses moving into the town centre, which will help boost the local economy.

“What businesses wanted to hear the Chancellor announcing was that the long overdue rates review was finally going to happen.”

Mr Simister added that the Chamber of Commerce would continue to argue for a long overdue reform of the business rates system.

He said: “While the Chancellor’s announcement that he was cutting business rates by 50% for a year was welcome news, we will be lobbying for the long ago promised full review which has sadly never materialised.”

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