Chancellor Rishi Sunak announced yesterday a cut in VAT for the hospitality industry and promised to pay companies a “job retention” bonus £1000 for each worker they bring back from furlough. The VAT cut from 20 per cent to 5 per cent for the tourism and hospitality industry – including restaurants, pubs and cafes – will last for six months. Mr. Sunak also announced a plan for an “eat to help out” 50 per cent discount on meals and non-alcoholic drinks in cafes and restaurants during the month of August. The discounts, which are a first for the UK, will only apply on Mondays, Tuesdays and Wednesdays and are limited to up to £10 per diner.
Mr. Sunak said that the government’s furlough scheme will still finish at the end of October as previously planned. He stated that the government would help people stay in work or in training until the recovery is under way, announcing a £2bn “kick-starter” job creation scheme to support the UK’s young people from becoming part of a blighted “Covid generation”. He said that the Treasury would create a pool of “free labour” for companies, paying the minimum wage to up to 300,000 people aged 16-24 – at an average of £5,500 each – for six months from August. The Chancellor also promised to pay companies £2,000 for every young apprentice they take on over the next six months while tripling the number of places on sector-based work academies. The Chancellor also announced a further £5bn to support infrastructure projects as well as a package of incentives to support the green economy.
It is expected that Mr. Sunak will hold a full Budget in the autumn.
Walpole welcomes these measures, especially the support for the hospitality and tourism businesses, but would like to see an extension of the furlough and partial furlough scheme given the anticipated length of recovery; and would like to see a reduction in VAT to 12.5% aimed at boosting the retail sector.