The hospitality and on trade has welcomed the Chancellor’s budget yesterday as the first step on a long road to recovery.
The British Beer & Pub Association (BBPA), welcomed Rishi Sunak’s positive package of support as a helpful first step on a long road to recovery, especially for food led pubs and those with accommodation and will help secure jobs.
However, it has also highlighted that further support will be required to help the thousands of community pubs and more than 2,000 UK breweries get back on their feet.
The Chancellor announced a cut to 5% on VAT for accommodation and food in hospitality. He also announced a ‘eat out to help out’ scheme to run during the month of August, but which will only apply to food and non-alcoholic drinks.
The trade association said the sector-specific VAT cut, which it had called for, would be beneficial for pubs that serve food and offer accommodation, and would also help compensate for an expected long period across Summer and beyond of reduced sales and revenue compared to before lockdown.
It also said the Chancellor’s ‘eat out to help out’ scheme, where Government will cover 50% of the cost of food in hospitality up to £10 per person per visit, will help encourage pub goers back to their local pubs where they offer food. However, for those pubs where revenue is more drinks led, the announcement today provides less help, the BBPA said.
The trade association also welcomed the Job Retention Bonus, stating it hoped it would help the sector to bring back as many of its furloughed staff as possible. It had previously estimated that 90% pub staff were furloughed.
The trade association also welcomed the announcement of the ‘kickstart job scheme’ for young people aged between 16 and 24 on Universal Credit, subsidising the costs of work placements for them in businesses. Pubs already directly employ 600,000 people and 43% of them are under 25, making them a vital source of jobs for young people.
The trade association highlighted that the pub and brewing sector has huge potential to create thousands of new jobs and employ more people, but to do this it needs to be thriving, not just surviving. This requires more support in the medium term directed at all pubs and brewers so they can help lead with the economic recovery. These measures include a significant cut to beer duty to bring the UK in line with other European countries who pay far less tax on beer, and a fundamental review of the business rates system so that pubs no longer pay an unfair share of them.
Emma McClarkin, Chief Executive of the British Beer & Pub Association, said:
“The chancellor has communicated clearly that pubs and hospitality are safe and open for business.
“The positive measures announced today are a welcome first step on what we believe will be a long road to full recovery for our sector.
“These initiatives, which we have been calling for, will be beneficial for pubs that serve food and offer accommodation, and will also help compensate for an expected long period of reduced sales and revenue for pubs.
“The ‘eat out to help out’ scheme, taking place in August, will also help stimulate visits to thousands of pubs that serve great food. It will help show to consumers that our pubs are back open for business.
“Of course, for those pubs that do serve significant amounts of food or offer rooms to stay in, the cut to VAT for these to 5% will be a welcome boost. Whilst the measures announced today will help food led pubs, those who just serve beer may feel they are left wanting.
“The Job Retention Bonus will help our sector to bring back as many of its furloughed staff as possible – with 90% of pub staff furloughed, it should help protect many jobs.
“Our pubs directly employ 600,000 people – 43% of which are under 25, making them a vital source of employment for young people in communities across the UK. We therefore welcome the ‘kickstart job scheme’ announced today for young people on Universal Credit.
“The pub and brewing sector has huge potential to create thousands of new jobs and employ more people, but to do this it needs to be thriving, not just surviving. This will require more support in the medium term directed at all pubs and brewers so they can help lead with the economic recovery. These measures include a significant cut to beer duty to bring the UK in line with other European countries who pay far less tax on beer, and a fundamental review of the business rates system so that pubs no longer pay an unfair share of them.
“Such measures will ensure our pubs thrive and continue to bring together people from all walks of life as they have done for centuries. We look forward to these measures being announced in the Government’s planned rebuild phase.”
Chris Jowsey, CEO of Admiral Taverns said: “Whilst I welcome the support to the hospitality sector provided by the Chancellor, I’m very disappointed that he chose to support only those large pubs where food is a major income stream. Many local, community pubs do little food or are wet led, but they have worked tirelessly to support their communities during lockdown. The Chancellors measures do not help these pubs at all and could be seen to be dissuading consumers from visiting smaller, local pubs. We would urge the Chancellor to level up and support all pubs, regardless of their size, location and retail offer.”
Dave Gosling, hospitality and leisure partner at accountancy firm, Menzies LLP, said:
“These measures could prove the lifeline needed by the UK’s struggling hospitality and leisure businesses to get customers back through the doors, and strengthen their financial position.
“The significant reduction in the VAT rate for food, accommodation and attractions, from 20% to 5% (until 12th January 2021) and £1,000 bonus per employee to assist with retaining staff on furlough, will provide a much-needed cash injection into one of the sectors worst affected by the lockdown restrictions. At the same time, the Government’s “Eat Out to Help Out” deal could prove the incentive needed to get consumers dining out again, and owner managers turning a revenue.
“However, this support won’t provide the sector with a silver bullet and decisive action to adapt business models is essential. As well as updating accounting systems and pricing structures in line with VAT changes, companies should continually review staffing levels to make use of the flexible furlough scheme and the new Kickstarter Scheme over the coming months.”
Jonathan Hubbard, Head of Hospitality EMEA at Cushman & Wakefield, said: “We welcome the Chancellor’s announcement today with measures to help the UK hospitality industry. The sector has long been campaigning for a cut in VAT to create a level playing field with other European destinations so whilst it is a positive step now, it needs to be seen as part of a longer term initiative and not just a short term impetus to counter some of the impacts of the COVID-related lockdowns. The challenge facing the UK hospitality industry is substantial and this is only part of the solution.”
Stephen Gow, general manager of The Chester Hotel in Aberdeen which reopened today (at noon Wednesday 8 July) and The Chester Residence in Edinburgh says,
“The hospitality industry has long been lobbying for a cut in VAT as it places a disproportionate burden on the sector compared to other European countries which have reduced VAT rates.
“This is a welcome short term boost for the industry as well as for our guests and diners. The VAT cut from 20% to 5% for the next six months on food and accommodation will encourage more people to eat out and to travel and will kick start the sector in Scotland as we begin to emerge from this unprecedented period of closure.
“The £10 per person ‘eat out to help out’ discount for those who dine out from Mondays to Wednesdays in August is also an innovative measure and we look forward to finding out more about how this will operate. Currently, The Chester Hotel is only open from Wednesday to Sunday so that we can test our new ways of operating safely, but this may help us back towards seven day opening for our al fresco dining experience. It’s our understand that hospitality businesses will register through a website to claim and this will be repaid to businesses within five days. If this system is as efficient as the HMRC furlough payments have been then this will provide an excellent support for businesses in our sector which need all the help and support they can to face the future post lockdown.”
Colin Wilkinson of the Scottish Licensed Trade Association said: “July 15 will be the kick-start for the majority of the industry in Scotland but we must remember it is estimated that nearly one-third of premises will either not be able to open at all or will not be viable even if they can open.
“While we particularly welcome the reduction in VAT from 20% to 5% – something we have been lobbying for – and agree that much of the Chancellor’s rescue package for the UK economy is good news, from the hospitality sector’s perspective Rishi Sunak needed to do more to help rebuild the industry.
“However, this substantial but temporary reduction in VAT for accommodation and food gives the sector a much-need boost,” he continued. “Experience from Ireland shows that when VAT rates are lowered tax revenue to the Government increase, and research undertaken in the UK indicates this would be reciprocated.
“Extending the commercial rates holiday would have also been a huge relief for the industry and again sector-specific support should have been introduced to assist those in most need.
“The entire industry needs ongoing support for many months, stretching to years if it is to recover to anything like the level it was prior to Covid-19.”
Mr Wilkinson said the Chancellor’s job retention bonus plan to keep furloughed workers in their jobs when the scheme ends in October will benefit the hospitality and tourism industry. But he added: “Overall business costs needed to be further reduced to not only protect the future of Scotland’s pubs and bars, but also the 60,000 jobs these businesses provide.”
CAMRA’s Chief Executive Tom Stainer said: “While a six-month cut in VAT for food served in pubs and the ‘Eat Out to Help Out’ voucher scheme in August is welcomed, we are concerned that pubs have been left behind by the Chancellor’s statement, which contained little support for community pubs. It is also disappointing to see no direct support for independent brewers and producers, who will not benefit from a VAT cut that specifically excludes beer and cider.
“CAMRA will continue to campaign for greater support for all pubs – including those that don’t serve food. We are calling for long-term support measures – business rate reform and a tax reduction for draught beer – to encourage people back to the supervised setting of the community pub.
“Lockdown has shown just how valuable our pubs are to local communities and the pivotal role they play in tackling loneliness and social isolation. It is absolutely right that they receive extra support during the difficult months ahead to ensure their continued survival.”