London businesses battered by Covid welcome business rate cut but warn of trouble ahead

Tap above to watch video report by Simon Harris

London businesses battered by Covid restrictions welcomed the Chancellor's 50% cut to business rates but warned a sharp rise in other costs could threaten jobs.

Rishi Sunak revealed roughly £7 billion worth of cuts to business rates during his Autumn Budget.

The series of changes for next year included the cancellation of the increase in the rates multiplier and a 50% cut to next year’s rates for most retail, hospitality and leisure businesses.

But UK Hospitality chief Kate Nicholls said the action may not be enough to offset increasing pressures elsewhere.

"Businesses are facing a significant wall of escalating costs," Kate Nicholls told ITV News London.

"We are seeing cost price inflation through the supply chain running at about 13%.

"We are seeing real labour shortages which are preventing many of the businesses from operating fully," she added.

Kate Nicholls said it meant job losses and business failures were still likely in the current financial climate, made worse by a planned rise in VAT.

"The VAT rate at the moment was reduced for the hospitality sector to help it through the pandemic," Ms Nicholls said.

"From 5% it went up to 12.5% in October and price increases have to feed through to customers as a result of that.

"It's due to go up again in April and that will be a further £3bn to £4bn tax bill for the sector to cope with," she added.

The hospitality boss said it was important to keep VAT low to stay "price competitive" and boost tourism which was "vital to getting the London economy moving again".

Jace Tyrrell, chief executive of the New West End Company, representing firms across London’s West End, said: "It’s encouraging to see the Chancellor finally act upon the need to reform the business rates system.

"Cancelling the inflation-linked rise to the multiplier may ensure that rates won’t go up this year, but they are still too high.

"Reducing the time between revaluations to three years is welcome, as is the short-term relief for investment in improvements and sustainability, but this falls far short of a fundamental review.

"This simply doesn’t meet the Government’s manifesto commitment to reduce the burden of business rates on business."

For some West End businesses, including Soho's legendary The French House, the Chancellor's announcement came as a big relief.

"It's fabulous! The business rate cut will save me over £50,000 a year which we can invest into other things, staff and the rest of it - happy days!" said owner Lesley Lewis.