"These measures are positive, but we aren't out of the woods" - Industry reacts to summer statement

By James McAllister

- Last updated on GMT

Industry reacts to VAT cut and Government restaurant vouchers UKHospitality RaiseTheBar SRA

Related tags: Chancellor, Government

Industry voices have reacted optimistically to the Government's stimulus package, but there are warnings more help will be needed to ensure the hospitality sector can recover from the Coronavirus crisis.

Speaking in the House of Commons earlier today (8 July), Chancellor Rishi Sunak set out a three-stage plan to 'support', 'create' and 'protect' jobs​.

In a bid to secure jobs in the hospitality sector, the Chancellor announced that the rate of VAT applied to food - both eat in and takeaway - accommodation and attractions will be cut from 20% to 5% from next Wednesday (15 July) for a six month period until 12 January 2021.

Furthermore, to help ensure there is enough demand as businesses in the sector reopen, Sunak also set out plans for an 'Eat Out to Help Out' discount scheme.

The scheme will provide a 50% reduction for sit-down meals in cafes, restaurants and pubs up to a value of £10 per head, across the UK between Monday and Wednesday every week throughout August.

Trade body UKHospitality says it 'warmly welcomes' the measures. 

“The measures announced today are extremely positive, and they should give many businesses in our sector much-needed help to get going again in earnest," says chief executive Kate Nicholls.

“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."

However, Nicholls adds that more support will be needed to further secure the future of the industry. 

“This doesn’t mean we are out of the woods, and there are still significant challenges ahead," she says.

"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."

Specifically citing the 'Eat Out to Help Out' scheme, the Sustainable Restaurant Association (SRA) says the support package is 'incredibly welcome'.

"Every family deserves a meal out and the Eat Out to Help Out initiative will help UK hospitality businesses be affordable to all in August," says chief executive Andrew Stephen. 

"We'd encourage diners to seek value from restaurants with values and choose dishes that serve local, seasonal produce. That way we can ensure that we’re supporting both responsible restaurants and the growers and farmers that so dearly need our custom now too.”

Others, however, have been more critical is their response. 

Tom Stainer, chief executive for the Campaign for Real Ale (CAMRA), says: “While a six-month cut in VAT for food served in pubs and the ‘Eat Out to Help Out’ voucher scheme in August is welcomed, we are concerned that pubs have been left behind by the Chancellor’s statement, which contained little support for community pubs. 

"It is also disappointing to see no direct support for independent brewers and producers, who will not benefit from a VAT cut that specifically excludes beer and cider.

“CAMRA will continue to campaign for greater support for all pubs – including those that don’t serve food. We are calling for long-term support measures – business rate reform and a tax reduction for draught beer – to encourage people back to the supervised setting of the community pub.

“Lockdown has shown just how valuable our pubs are to local communities and the pivotal role they play in tackling loneliness and social isolation. It is absolutely right that they receive extra support during the difficult months ahead to ensure their continued survival.”

Meanwhile Matthews Sims, founder of the #RaiseTheBar campaign and CEO of the Croydon BID, has expressed frustration of over the tens of thousands of hospitality, tourism and retail businesses who have been exempt from all grants and funding, and desperately need the Government to redirect the surplus £1.7bn in funds allocated to local authorities.

“The Chancellor says he will never accept unemployment is unavoidable yet he is turning a blind eye to the hard truth that employees of over 55,000 businesses across England and Wales will soon lose their jobs as their employers have been overlooked and ignored at every turn for financial support," he says.

"More than 55,000 retail, hospitality and leisure businesses are exempt from existing grants and funding schemes. And the very grant that should be their lifeline, the Retail Hospitality and Leisure Grant [RHLG], is bound by out of date and arbitrary guidance on business rates, with these businesses falling outside of the set eligibility requirements. 

"It was revealed earlier this week that local authorities have an underspend of £1.7bn on grants and funding and we are calling on the Government to act now and redirect this surplus to the Retail Hospitality and Leisure Grant [RHLG] and increase the rateable value threshold for eligibility from £51,000 to £150,000.

"Doing this will save jobs, reduce unemployment, protect skills and help restart the hospitality and tourism sectors which the Chancellor today stated are vital to reopening the UK economy.”

Related topics: Business & Legislation

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