Plea for reduction in VAT to stay put to help out hospitality sector

Rishi Sunak has been urged to extend the VAT reduction for pubs and restaurants until at least the end of the year to rescue the ailing hospitality industry.

The chancellor lowered the rate to 5% last year for food and soft drinks and is planning to keep it in place until at least June, when it is hoped Britain will return to something approaching normal life.

However, the country’s MPs and business leaders are demanding the rate stay in place for another 12 months, saying a return to the 20% standard rate would strangle the sector’s recovery.

The SNP’s business spokesman, Stephen Flynn, said: “The hospitality and tourism sector has been one of the hardest-hit during this pandemic, so any plans to prematurely scrap support measures risks sending many over the brink.

“Rather than withdrawing support at this critical time, the UK Government should be strengthening measures to protect businesses and jobs.

“The chancellor must use this week’s Budget to announce a full extension of the VAT cut from 20% to 5% ’til the end of the year as a minimum – rather than sticking with the March cliff-edge.”

He added: “Given a number of those businesses operate on a seasonal basis, extending that relief to the end of the year is critical to allow them to get back on their feet.

“It is vital that Rishi Sunak brings forward a meaningful package of measures to support our economy, businesses and people’s jobs – rather than scrapping support and signalling a return to Tory austerity.”

Earlier, when asked to provide more help, Mr Sunak said the hospitality industry remained “uppermost in my mind”.

He said: “For me it’s always been important to try to do what I can to support that industry.

“That’s why the grants today are really important.

“We have cut VAT from 20% to 5% temporarily for that industry. We’ve cancelled all their business rates over the past 12 months.

“It’s because I care about that industry and the people who work in it that I want to try to do what I can for those jobs.

“They should feel reassured that they remain uppermost in my mind and you will see what we’re going to do in a few days’ time.”

Rishi Sunak said he cared about the industry.