Six things to look out for in Rishi Sunak's Budget today for hospitality
Chancellor Rishi Sunak is to confirm today what measures he will put in place to protect the UK economy and hospitality businesses.
The announcement is expected to take place in Parliament following Prime Minister's Questions at about 12.30pm, with many in agreement that it will be one of the most critical Budgets ever delivered by a chancellor for the hospitality sector.
So far, we know Sunak will be announcing further one-off grants of up to £18,000 for hospitality businesses in England, £150m to allow communities to take over their local pubs and that the furlough scheme will be extended until the end of September. Here are six further things to look out for in the Budget today for the sector:
Extension of the VAT cut The chancellor reduced VAT from 20% to 5% for food, accommodation and attractions last year to support the reopening of hospitality and tourism. Many are calling for this to be extended as well as for it to include sales on alcohol, while a petition to extend the VAT cut has been signed by more than 17,000 people.
The move has already been backed by some 83 MPs although treasury minister Jesse Norman said in January there were no plans to further extend it. At the time the Cut Tourism VAT Campaign said that if the VAT rate reverts to 20% in April, this could mean the loss of 310,000 more jobs in hospitality and tourism.
Another year free of business rates Operators are calling for the business rates holiday to be extended into the 2021/22 financial year, another measure that would help businesses get back on their feet. The Treasury, attempting to negate the economic impact of the coronavirus, wrote off business rates bills for the financial year 1 April 2020 to 31 March 2021, to the tune of £10.13b. Norman suggested last month that further business rates help could be on the way and the Scottish government has already proposed another year of business rates relief for Scottish hospitality and tourism businesses, so the pressure is on for Sunak.
Support on rent The Business, Energy and Industrial Strategy (BEIS) committee published a report last week calling for the government to address the issue of growing commercial rent arrears, which it said was "jeopardising" many businesses' prospects of long-term recovery. With the moratorium protecting commercial evictions due to expire at the end of March, businesses are facing up to a year's worth of rent arrears due in a matter of weeks unless the government intervenes. UKHospitality has said rent debt will reach an estimated £3b for the hospitality sector alone when it expires.
A cut on beer and/or wine duty The beer and wine industries are calling for lower duty to help venues compete with supermarket sales and it is understood 68 Conservative MPs have backed calls for a cut in beer duty, which is being considered by the chancellor. However, the wine industry has said that to cut beer and not wine would unfairly impact women.
Reintroduction of the Job Retention Bonus The Job Retention Bonus was due to pay employers £1,000 for each member of staff retained until the end of January but this was deferred following the extension of the furlough scheme, leaving businesses scrambling to balance their budgets and some facing six-figure gaps in their balance sheets. Sunak has it will be reintroduced "at the appropriate time".
A second Eat Out to Help Out scheme The industry is divided over whether a second Eat Out to Help Out scheme would be helpful. Some businesses claimed it helped revitalised trade and boost confidence in the sector, while others said it simply moved busy days to earlier in the week and staff struggled to cope.
More than 49,000 businesses claimed £849m through the scheme, which offered a 50% discount to customers on food and non-alcoholic drinks bought to eat in Mondays to Wednesdays between 3-31 August, which venues could then get reimbursed by HMRC.
