Guidance for British Luxury Businesses | Help for hospitality and tourism
Walpole welcomes yesterday’s announcement by the Chancellor of the next phase of fiscal packages to support jobs and proactively help to re-start the sectors which have been hardest hit by the crisis: hospitality and tourism. The bonus for employers who bring back their people from furlough is a positive move forwards – as are the efforts to create jobs for young people and the reduction of VAT – but many businesses will find the end of the Job Retention Scheme in October simply too early given the anticipated length of recovery.
A boost for the retail sector, which is suffering from low consumer confidence and subsequent footfall, would be a reduction in VAT that goes beyond the hospitality sector and supports retail businesses.
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.