In a Summer Statement, Chancellor, Rishi Sunak, has announced plans aimed to prevent a flood of mass unemployment in the coming months. In response to the worst-hit industries affected by the Coronavirus pandemic, they’ll give a particular, much-needed, and welcome boost for the country’s hospitality sector.
Financial support – phase two
After the country went into lockdown back in March this year, the government provided £160bn of payment schemes, income support, and other taxable reliefs to cushion the economic fallout. Now, the Chancellor has announced ambitious plans for a second phase of financial support.
It seems the main objective is to get two of the largest sectors in the hospitality trade back on track – Food and Beverage, and Travel and Tourism. Both key areas for the UK and the South West in particular.
What does it mean for hospitality?
As part of a three-stage plan, the announcement was said to ‘support, create, and protect jobs’ with the hospitality sector being the biggest beneficiary after being one of the hardest hit. Here’s a breakdown of what we know.
– VAT Slashed for hospitality
VAT will be cut back from the current rate of 20% to 5% for food (both eat-in and takeaway), accommodation, and attractions. This will last for the next six months, from July 15th to January 12th 2021. This should help around 150,000 businesses and be worth a stimulus of £4bn.
– Eating out discount scheme
To encourage customers to visit pubs, restaurants, and cafés, the ‘eat out to help out’ scheme will give customers a 50% discount at participating venues across the UK of up to a maximum of £10 per head from Monday – Wednesday throughout August.
Around 80% of hospitality businesses stopped trading in April with almost 1.8 million employees being furloughed. With both initiatives in place, the support will help protect a total of over 4 million jobs.
A positive step
Alongside other crucial schemes to help create new jobs and support existing ones, we’re pleased to see the reduction of VAT which will bring a huge boost to the hospitality industry. It will give many businesses some much-needed breathing space, while the ‘eat out’ scheme will help them even further, as well as encouraging customers to return to eating out, albeit with a lot of conditions.
The South West relies heavily on hospitality and tourism to help the region thrive. These plans are a welcome measure to stimulate the industry and get the sector back on its feet right across the UK. All in all, a really positive step to achieving a V shape economic recovery.
Jon Clyne, Director of Charles Darrow commented: “Over the past 4 months, given the relative inactivity of the marketplace, we have been speaking with many past, current and future clients just sharing information, as concerns were mounting. Managing any business around COVID-19 is still a huge challenge, the fear of missing anymore of the summer trade in south west, and the financial consequences of doing so were becoming more and more about survival. Whilst This is another step in the right direction for the hospitality industry, we need to ensure government support is inclusive for all businesses, not just the lucky few”.