Professional Comment

Budget 2021: Will Sunak’s Breather for Hospitality Sector Boost the Business

By Kunal Sawhney, CEO of Kalkine (

The latest budget allocation for the hospitality and leisure sector has come as a fresh lease of life for most businesses after British Finance Minister Rishi Sunak read out the government’s public spending plans for the year 2021 on Wednesday, 3 March. In his opening remarks, Sunak assured the parliament that he and his government would do “whatever it takes” during the pandemic and that he has done and will continue to do so to help the economy recover at the fastest pace.

The hospitality sector, which is a crucial part of the UK economy, has run into major losses due to the pandemic and subsequent lockdowns.The sector found prominent mentions in the budget speech, where Sunak highlighted that around 150,000 hospitality and tourism businesses employ 2.4 million people.

Sunak’s budget announcements came as a fresh breather for the sector, which was long awaited and demanded by the businesses and operators. Sunak said the total direct cash support to businesses in the sector had reached £25 billion.A look at the latest sops announced during the budget:

1. VAT:The VAT rate has been retained at 5% for the next six months to 30th September. This would help:
• Restaurants, cafes, and pubs

  • Hotels, inns, boarding houses, and similar establishments.
  • Holiday and caravan parks and other holiday accommodation businesses.
  • Shows,Theatres, Circuses, Cinemas, Concerts
  • Fairs and Amusement parks
  • Museums
  • Zoos
  • Exhibitions and similar cultural events and facilities

    The Value-added tax is paid by businesses and services to HMRC on the items they sell or provide to customers. Last year in July, Sunak had first slashed the VAT rate to 5% from 20% for food, drink, and holiday businesses.

2.Business rates: The 100% business rate holiday has been extended from 1 April to 30 June.

3.Besides, the businesses can benefit from the 66 per cent discounted business rate from 1 July 2021 to 31 March 2022 with a cap of £2 million per business.

4. The universal credit allowance was also extended for another 6 months, along with one-off payment of £500 payment for eligible.

5. A restart grant worth up to up to £18,000 per premises for hospitality, accommodation, leisure businesses, providing them with the base they need to replan and restart in the coming months.

6. The Recovery Loan Scheme, which will be implemented from 6 April, is open to all businesses and would pro- vide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million.

7. Small Business Rates Relief: Around 750,000 retail, hospitality and leisure properties in England will pay no business rates for 3 months from 1 April.

8. Regional grants: The Boris Johnson government earmarked an additional £425 million of discretionary business grant funding, along with £1.6 billion.

9. Furlough job support:To help people survive the next stage of the pandemic crisis, Sunak extended the Coronavirus Job Retention Scheme till the end of September 2021, which means eligible people will get 80% of their salary for hours lost due to pandemic and lockdowns.As the economy reopens and businesses get back on track, the employer contribution will increase to 10% in July, 20% in August and 20% in September.

10. Alcohol duty:The duty rates on beer, cider, wine and spirits was frozen till next years in a bid to support the hospitality business and suppliers. According to experts, the frozen rates would save £7.3 billion for the customers, equating to 2p on a pint of beer, 1p on pint of cider, 8p on a 75cl bottle of wine, and 30p on a 70cl bottle of Scotch.

11. Additional support: The government is providing grants of £150m in a bid to save struggling community pubs. A fund of £126 million is being offered by the government for high quality work placements and training for young people.Those employers who will train these new entrants will receive £1,000 per trainee.

Employers and owners will get paid a sum of £3,000 for hiring a new apprentice between April and September.

An additional £7-million fund will be provided from July to help employers set up and expand portable apprenticeships.

Trade Credit Reinsurance scheme: Under the scheme the government is providing a cover up to £190 billion on around half a million businesses.

The budget allocation received mixed reactions from businesses and experts.While some welcomed Sunak’s attempt to rearrange the ailing sector, some business owners have said it is too little citing the pressing concerns like rising rent bills, cutting beer duty, among others.

Since the pandemic outbreak, the sector has reported 660,000 job losses, as per the estimates by trade body UK Hospitality, while the revenue was down 40 per cent as compared to 2019.

Though Sunak has set the roadmap for the sector recovery, it is to be seen how well the plan is implement- ed and once thriving sector regains its glory, not full but at least to some extent.