Hos­pi­tal­ity firms toast VAT cut and dis­counts for din­ers

The Daily Telegraph - Business - - Summer Statement: Focus On Business & Economics - By Oliver Gill

PUB, restau­rant and tourism chiefs have toasted a huge VAT cut and £500m din­ing dis­count scheme to save their in­dus­tries from col­lapse.

Chan­cel­lor Rishi Su­nak slashed VAT from 20pc to 5pc for hos­pi­tal­ity and tourism firms as part of an ef­fort to put a rocket un­der de­mand and save sum­mer trad­ing. The re­duc­tion will ap­ply from July 15 un­til Jan­uary 12 2021.

The for­mer Gold­man Sachs banker also un­veiled an un­prece­dented “eat out to help out” dis­count scheme, which will al­low par­tic­i­pat­ing restau­rants to of­fer half-price meals through­out Au­gust, with the Ex­che­quer cov­er­ing the dis­count.

But while some bosses wel­comed the Chan­cel­lor’s £4bn cat­a­lyst for the hos­pi­tal­ity in­dus­try, oth­ers were left thirsty for more. Nick Macken­zie, at pub chain Greene King, said: “The new eat­ing-out dis­count will be a great en­cour­age­ment for cus­tomers to sup­port the na­tion’s pubs at this vi­tal time.

“While the cut to VAT on food is great news for the hos­pi­tal­ity sec­tor, it’s dis­ap­point­ing that it doesn’t ex­tend to beer.”

Wether­spoon chair­man Tim Martin hailed the in­terim mea­sure as a vic­tory fol­low­ing his firm’s cam­paign for tax equal­ity be­tween hos­pi­tal­ity com­pa­nies and su­per­mar­kets, which charge no VAT on food. He said: “The Chan­cel­lor’s ini­tia­tives go a long way to recog­nis­ing this in­equal­ity, al­beit on a short-term ba­sis. Hope­fully this will be­come a long-term change.”

For­mer Con­ser­va­tive front­bencher Sir Pa­trick McLough­lin, who is now chair­man of the Bri­tish Tourist Au­thor­ity, said: “This is a shot in the arm at a very vi­tal time.”

The Food and Drink Fed­er­a­tion said it was ex­tremely ap­pre­cia­tive of gov­ern­ment cuts to sup­port the sec­tor.

But the trade body’s chief ex­ec­u­tive Ian Wright warned that even more help could yet be needed to save mil­lions of work­ers’ jobs. He said: “If de­mand does not re­turn quickly, these firms will con­tinue to strug­gle un­less they – and the sec­tor they sup­ply – re­ceive ad­di­tional em­ploy­ment sup­port.

“The Chan­cel­lor must there­fore keep the op­tion of ex­tend­ing full fur­lough sup­port to hos­pi­tal­ity and their food and drink sup­pli­ers in his back pocket.”

Any ex­ten­sion to the tax­payer­backed fur­lough pro­gramme has been all but ruled out by Mr Su­nak, who warned there was a risk it could sup­port work­ers long af­ter their jobs cease to be vi­able.

There are also ques­tions over whether cus­tomers are ready to re­turn to their old habits af­ter ag­gres­sive pub­lic health warn­ings to stay at home.

A sur­vey by RBC Cap­i­tal Markets last week found fewer than one fifth of peo­ple would be head­ing back to the pub im­me­di­ately.

Vet­eran stock picker Richard Bux­ton, of Jupiter As­set Man­age­ment, said: “Ques­tions re­main over whether such give­aways … will be suf­fi­cient to en­tice a still-wary pub­lic back into the coun­try’s pubs, restau­rants and at­trac­tions.”

Kate Ni­cholls, of trade body UKHospi­tal­ity, said: “It is good to see that the Gov­ern­ment ac­knowl­edges that our sec­tor has been uniquely hit by this pan­demic.

“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.”

Ms Ni­cholls also warned that the end of in­terim re­stric­tions pre­vent­ing prop­erty land­lords from wind­ing up busi­nesses over non-pay­ment of rent could hit the in­dus­try.

She said: “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.”

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.