The hospitality sector has arguably been one of the hardest hit by the Coronavirus pandemic, with restaurants, pubs, hotels and attractions being forced to close their doors and international travel being halted from March.
Whilst Budget 2020 brought with it a number of emergency measures to help leisure businesses through the crisis, including the Coronavirus Job Retention Scheme, Business Rate reductions and the Retail, Hospitality & Leisure Grant Fund, it quickly became clear that the economic outlook for the sector was far from ‘sunny’ and that more needed to be done.
So, as part of Rishi Sunak’s plan to mitigate the impact of the Covid-19 crisis, the Chancellor today unveiled further measures designed to stimulate social consumption and get hospitality businesses ‘bustling again’.
The first of the measures targeted towards this sector is a temporary reduction in the rate of VAT, from 20% down to just 5%, with effect from 15 July until 12 January 2021. Expected to cost £4bn, the cut will apply to eat-in or hot takeaway food from restaurants, cafes and pubs; accommodation in hotels, B&Bs, campsites and caravan sites; and attractions like cinemas, theme parks and zoos.
The second measure, the likes of which has never been tried in the UK before, is the introduction of the ‘Eat Out to Help Out’ discount scheme, which, for the month of August, will see the Government subsidise meals eaten at participating businesses.
Monday to Wednesday, diners will receive a discount of 50% off the cost of their eat-in meals, including non-alcoholic drinks, subject to a maximum of £10 per head. To participate, businesses will need to register through a website that will open next Monday (13 July) and will then be able to claim the discount back on a weekly basis throughout August, with funds reaching their bank accounts within five working days.
Whilst both of these measures are, undoubtedly, positive news for the sector and address some of the most pressing needs, they are, however, only short-term solutions and further action to address the longer-term outlook is expected in the Autumn Budget and Spending Review.
For further guidance on the Summer Economic Update, please click here.