Chancellor unveils financial support for hospitality

Chancellor Rishi Sunak has announced significant financial support for the hospitality sector, including VAT cuts and a scheme giving customers up to £10 off each on sit-down meals throughout the month of August.

This comes as part of a £30bn plan to prevent mass unemployment in the UK as the economy is hit by coronavirus.

In his Summer Economic Update, the Chancellor said that, from Wednesday 15 July to 12 January 2021, the rate of VAT applied on “most tourism and hospitality-related activities” will be cut from 20% to 5%.

He also unveiled a new ‘Eat Out to Help Out’ scheme to encourage people to return to the out-of-home drinking and dining environment.

The scheme will offer a 50% reduction for sit-down meals in pubs, bars, restaurants and cafes across the UK Monday to Wednesday every week. The maximum discount is £10 per head for everyone, including children.

Outlets will need to register through a website, which opens next Monday. Each week, businesses can claim their money back, with funds in their bank account within five working days.

In addition to this, the government introduced a Job Retention Bonus, where UK employers get a £1,000 bonus for every staff member kept on for three months when the furlough scheme comes to an end in October.

There will also be a £2bn Kickstart Scheme, launched to create hundreds of thousands of new, fully subsidised jobs for young people aged between 16 and 24 claiming Universal Credit.

UKHospitality chief executive Kate Nicholls said: “It is reassuring that the Chancellor singled out hospitality and tourism as a vital part of the UK’s economy and a pillar of social life around the UK. It is also good to see that Government acknowledges that our sector has been uniquely hit by this pandemic.

“Customer confidence is key to our sector’s revival and our ability to help Britain’s economic recovery. Applying every precaution to provide safe venues will count for nothing if customers are not coming through our doors.

“This significant VAT cut, heightened ability to retain staff and incentives for consumers to eat out together amount to a huge bonus. We hope that the UK public rightly sees it as sign that we are ready to welcome them back safely. The future of many businesses and jobs depends on it.

“The measures to support job retention and recruitment are very positive. Even after the reopening of some venues, we estimate that around 1.5 million workers in our sector are still furloughed. With revenues likely to be down for the foreseeable future, the support measures to get workers off furlough and back into work will be greatly appreciated.

“Support to retain our workforce with a retention bonus, kickstart employment and bring on trainees and apprenticeships should also be a huge boost to our sector as we begin our long recovery.

“Businesses have been closed for months and, with the possibility of a difficult winter ahead, support to create jobs will be vital if hospitality is to play the significant role we hope it will in helping boost the economy.

“This doesn’t mean we are out of the woods, and there are still significant challenges ahead. The biggest of these is the spectre of rent liabilities which many businesses are still facing from their closure period.

“Rent bills have piled up over the past few months even though venues were closed, and businesses are now facing huge rent debts with prospects for the future still in the balance. We are going to need Government support on this before too long.”

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