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Wed 3rd Mar 2021 - Sector gives cautious welcome to industry support in Budget |
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Sector gives cautious welcome to industry support in Budget: Sector leaders have given a cautious welcome to the support package announced for the industry in today’s (Wednesday, 3 March) Budget. Hospitality businesses will continue to receive a 100% business rates holiday for the next three months – and will then see their bills discounted by up to two thirds for the rest of the financial year. Chancellor Rishi Sunak also announced the reduced VAT rate of 5% for accommodation and foodservice businesses would be extended until the end of September and then an interim rate of 12.5% for the following six months. Sunak said after the three-month business rates holiday, rates would still be discounted by two thirds, up to a value of £2m for closed businesses, “with a lower cap for those who have been able to stay open”. He added the standard rate of VAT for the sector would not return until April next year. Sunak said this makes for a £5bn cut in VAT. Alcohol duty was frozen while businesses will receive £3,000 for each new apprentice hired between 1 April and 30 September 2021 – double the current payment. In 2023, the rate of corporation tax paid on company profits will increase to 25%. For the next two years, when companies invest they can reduce their tax bill with a “super deduction” of 130% of the cost of investment. Sunak also confirmed the extension of the Coronavirus Job Retention Scheme (CJRS) – known as furlough – until the end of September, and hospitality and leisure businesses will get “restart” grants of up to £18,000. British Institute of Innkeeping chief executive Steven Alton said: “With the package of support from government laid out, our pubs can begin to look to the future of their businesses once more. The support announced gives our sector an opportunity to rebuild as it reopens in line with the government roadmap, however, any changes to the plan will need to be matched with appropriate support measures. I have no doubt customers will return to their local pubs at the earliest opportunity and, once again, be given a fantastic hospitality experience.” Loungers chairman Alex Reilley tweeted: “VAT cut is very welcome. Business rates after June sounds murky. Grants are also very welcome but without confirmation of revised (or abolished) State Aid limits we don’t know whether we can claim these grants.” Matt Snell, chief executive of Gusto, tweeted: “We’ve been in forced closure for almost a year so nothing the chancellor did today could make up for that. That said, I am satisfied with the announced measures and I feel sure they will help me get our business back on its feet, protect jobs and secure further growth.” Peter Borg-Neal, founder and chairman of Oakman Inns, tweeted: “All in all a positive Budget for hospitality. Concern remains for those industry colleagues who are badly exposed to rent debt. We also need the VAT cut to be made permanent.” Rik Campbell, co-owner of modern Indian restaurant group Kricket, said: “I’m feeling inspired. It’s an innovative plan and it feels like the government is doing what needs to be done – supporting the right businesses and asking for contributions from those that can afford it.” Sacha Lord, night-time adviser for Greater Manchester, tweeted: “Clearly, the devil is in the detail but, on the whole, I think today’s Budget is very welcome and supportive for hospitality across the UK.” Night Time Industries Association chief executive Michael Kill said: “The Budget is yet another statement from the chancellor that has failed to recognise the need for additional support for the night-time economy sector. We welcome the extension of VAT and rates relief, and that more money is going to hospitality and the Culture Recovery Fund. But both of these interventions again reveal the chancellor’s inability to comprehend the specific challenges faced by night-time economy businesses, such as nightclubs, casinos and bars, many of which have been entirely unable to open during the pandemic and face higher costs relative to wider hospitality. While the roadmap announcement gave hope to our sector last week, the chancellor is now at risk of snatching defeat from the jaws of victory. With the money spent on support to date, it is ridiculous that many nightlife businesses may now fall at the final hurdle. The blame for this unnecessary personal hardship and damage to the wider economic recovery will fall at the chancellor’s feet unless he acts to ensure proportionate sector-specific grant funding is available immediately for night-time economy businesses.” Helena Hudson, founder of the Real Eating Company, said: “The combination of the restart grants, VAT reduction and business rates holiday extension is a powerful cash injection into the high street, which small, agile businesses are well placed to take advantage of. Looking ahead, it would be helpful for the government to listen more to the grassroots of hospitality through a dedicated minister for hospitality. Our industry has the potential to harbour the next wave of growth champions but we need collective support to help bring life and energy back to high streets across the UK in the long-term.” David Moore, owner of Michelin-starred restaurant Pied a Terre, said: “All in all, it feels like a good Budget. The reduction in business rates is great, though, ultimately, I’d be happier if he had said he was willing to look at the system and fix it, but for now, we’ll take it. The furlough extension and employer contributions of 20% will support those who need it most as the industry comes back to life. The grants feel a little on the low side, though I’m very grateful for them, and the VAT reduction looks like it’s on the money with an extension and then a tapered return. Overall, I got what I asked for so now it’s time to focus on regrowth.” Sam Morgan, chief executive of We Are Craft Group, which owns and operates, Craft, 8 and Artisan Street Kitchen in Birmingham, said: “The relief issued for business rates is quite potentially a life-saving measure for many medium to large venues based in city centres with extremely high rateable values, which, for years, have been unjustified and have heavily contributed to the loss of the high street. The chancellor has to now commit to wholesale policy change in this area as it’s vital to strengthen business return to the high street, a suggestion of a tax based on the profitability of the business is far more justified than a tax based simply on the size and assumed value of a property that’s being occupied by a tenant. The development of the extension to the reduction in VAT is also pivotal in the sector’s return. However, the chancellor needs to commit to a wholesale review of VAT on fresh food production as the standard 20% rate is one that has crippled the hospitality sector. It also means those businesses were simply not able to build viable cash reserves to protect them against any unforeseen circumstances.” Philip Inzani, founder of Polo 24 Hour Bar in London, said: “It’s generally a good Budget. The furlough scheme being extended is a huge help and will keep people employed for longer. However, the question arises that when employers have to contribute 20% in July, will sales have recovered enough in order to sustain this increase? This pandemic has shown the fragility of the hospitality industry and how we’re reliant on very tight margins. This needs to change in order for our sector to fully recover. We need a long-term plan.” Sunak said: “I said I will do whatever it takes. I have done and will continue to do so.” The economy is expected to return to pre-covid levels by the middle of next year but Sunak said repairing the damage will “take time”. He said the economy will be 3% smaller in five years than it would have been. He added: “The Office of Budget Responsibility forecast our economy will grow this year by 4%, by 7.3% in 2022, then 1.7%, 1.6% and 1.7% in the last three years of the forecast.”
UKHospitality – crucial support has been provided to sector at a critical time: The chancellor has listened to the concerns of the hospitality sector and appears to have provided crucial support to help businesses at a critical time, UKHospitality has said. Chief executive Kate Nicholls said: “The chancellor has announced support to help our sector get back up and running. Now it is vital the government sticks to its date of 21 June for a full reopening of the sector. Delay would see more businesses fail, more jobs lost and undo much of the good work the chancellor has done to date.” On VAT: “An extension of the 5% VAT rate was absolutely crucial for hospitality businesses. Confirmation the government will provide support for a full year will bring peace of mind to the sector. UKHospitality has been pushing hard for this and it was critical that it was delivered today. While it would have been better to have extended the 5% rate further, it is now vital the government looks at introducing the interim rate for hospitality on a permanent basis. It would be a positive legacy of an otherwise dreadful year for our sector. A permanent reduced rate of VAT for hospitality would redress the unfair tax imbalance that our businesses have faced for too long and make us internationally competitive.” On business rates: “It is great this fixed cost has been eliminated during the recovery and is heavily reduced for the rest of the financial year. It will give some much-needed breathing room for businesses as they prepare to reopen, though the cap will impact some larger businesses. Not all businesses will be able to reopen swiftly, it will take them time to get up and running. They will be burning through meagre cash reserves as they do so, so this extra flexibility is going to be crucial in ensuring as many as possible stay alive. The forthcoming revamp of the rates system then has to deliver a wholly new system of business tax that no longer unfairly penalises our sector.” On grants: “The previously announced grants are a welcome boost. The priority now is making sure these grants find their way to the businesses that need them as quickly as possible and that interest rates are capped. It is critical government makes clear that EU State Aid rules do not apply to these grants.” On furlough: “The extension of the scheme brings stability and peace of mind to employees after a dreadful year of uncertainty. There is still a worry it will place unnecessary pressure on fragile businesses just as they are beginning to get back to their feet, though.” On duty: “Scrapping any increase on the rate of alcohol duty is a pragmatic step. Additional costs were the last thing businesses needed at the minute. As we emerge from the crisis, we hope the government will seriously consider a separate rate, long pushed for by this sector, for on-trade alcohol.” On the recruitment bonus: “Increasing the recruitment incentive will be a major boost in helping the hospitality sector rebuild once the crisis has passed. The doubling of the apprenticeship incentive will be a major boost for our sector’s recovery and aids our commitment to upskilling people across the country. Driving the economic recovery of the UK will be dependent on getting people back into work and this will be a huge help. The hospitality sector is going to be a key weapon in the country’s arsenal if it wants to rebuild the economy and tackle unemployment.” On investment relief: “The commitment to encourage investment, with 130% tax reliefs, is very encouraging as we rebuild and regenerate high streets and local communities.” On rents: “The biggest gap in support remains the outstanding sector rent debt. We need the government to announce an extension of the moratoria at the earliest opportunity and work with industry to establish a landing zone to resolve this £2bn millstone around our recovery.”
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