Retailers warn on VAT cut exclusion
Laura Onita CRISIS-HIT retailers, technology firms and small businesses devastated by the coronavirus recession have complained about missing out on vital support from Rishi Sunak.
Bosses said the Chancellor’s economic update was a missed opportunity and that industry-specific tax cuts and subsidies for hospitality and housing firms should have been mirrored in other industries.
The vast majority of retailers were forced to shut shops and lost millions of pounds in sales during the lockdown, but have not been included in a VAT cut offered to hospitality companies that is likely to boost demand.
A flurry of retailers have collapsed into administration or been forced into making major job cuts since the Covid pandemic struck, with thousands of workers already laid off.
Helen Dickinson, of the British Retail Consortium, said it was disappointing that the Chancellor had not extended the VAT cut to retailers and the three million people they employ.
She added: “It was a missed opportunity and we hope that the Government
will reconsider this ahead of the autumn Budget.”
GlobalData retail analyst Thomas Brereton said retailers would have welcomed a similar initiative to the “eat out to help out” subsidy for hospitality firms, which is offering up to £10 off meals in restaurants next month.
He said non-food retailers in bricks and mortar stores are set to end 2020 £34.8bn worse off than last year.
The aerospace and motor industries also warned that a lack of targeted support for manufacturers could cost jobs as car businesses struggle to recover from lengthy closures and a collapse in demand.
Mike Hawes, chief executive of the Society of Motor Manufacturers & Traders, said: “It’s bitterly disappointing the Chancellor has stopped short of supporting the restart of one of the UK’s most important employers and a driver of growth.”
The UK stands alone among Europe’s major economies by failing to provide specific help for the industry, he added.
France and Germany have unveiled multibillion-euro schemes to help their largest marques. Meanwhile, leading figures in tech called for more work to help the country’s army of fast-growing start-ups.
Sabby Gill, the managing director of software firm Sage UK, said the Chancellor should be doing more to help small businesses embrace trade opportunities ahead of Brexit by encouraging entrepreneurship and offering grants for companies to invest in new technology. The Chancellor has already introduced measures to help tech start-ups including the Future Fund, which has doled out more than £320m in loans to early-stage businesses.
Franz Doerr, chief executive of renting start-up Flatfair, said: “The UK’s tech sector has been booming over the last few years, and to not support it now during this time would risk erasing years of growth and job creation.”
Meanwhile, Gerard Grech of industry body Tech Nation welcomed schemes to offer bonuses for hiring trainees and apprentices.
Mr Grech also praised a £17m proposal to invest in sector-based digital academies, which help job seekers find work.
Small businesses that slipped through the net of the Government’s emergency measures to prop up the economy are still being overlooked, according to trade body the Institute of Directors (IoD).
Jonathan Geldart, of the IoD, said that while tax cuts and job creation schemes were welcome, he had hoped for broader measures – particularly to help firms that have so far been left to fend for themselves.
Discussing the latest support measures, Mr Geldart said: “A glaring omission throughout this pandemic has been the exclusion of small company directors, many of whom have not been able to access income support.
“Widening grant schemes could help those who have been left struggling without assistance, and help more firms to reopen.”
‘A glaring omission throughout this pandemic has been the exclusion of small company directors’