Chancellor Nadhim Zahawi is preparing a multibillion-pound package of tax cuts to help businesses struggling with increasingenergy costs.
The Chancellor is said to bedrawing up emergency plans to save businesses on the brink of collapse for the incoming prime minister, who will be named later today.
According to The Times, the Chancellor believes the government can learn from the pandemic and introduce targeted cuts in VAT and business rates to protect the hospitality and retail sectors.
Failing to act the Chancellor has warned , could lead to of bankruptcies across the country, and long term scarring of the economy.
The chancellor could also give tax breaks to energy-intensive industries such as steel, paper, glass, ceramics and cement producers.
had an example given to me the other day from EDF. One of their clients, their bills have gone from £25 million a year to £75 million. This is a perfectly viable business. We have to make sure we support businesses as well as households.
“The lesson from Covid is that actually there are some levers like VAT, like business rates. Targeting particular sectors of the economy, whether it’s hospitality or high-energy use sectors, can be done very effectively, but as I say there are no easy options.”
He also reportedly urged people not to “panic” about inflation and the worsening cost of living crisis.
On Friday (September 2) the UKHospitality called on the Government for urgent support if thousands of hospitality businesses are to avoid collapse this winter in the face of soaring energy costs.
In a letter to Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng, UKHospitality Chief Executive Kate Nicholls writes: “Hospitality businesses are facing a crisis this winter, with soaring costs combined with a sharp drop in disposable incomes for our customers.
“Without support, the industry will see widespread business failure, leading to tens of thousands of job losses, persistent scarring to high streets and damaged social mobility.”
Nicholls adds:
“Support has rightly been committed to households, but more must be done to help businesses, particularly SMEs, that are at risk of failure due to no fault of their own. Hospitality businesses had their resilience severely strained during the pandemic and are not able to weather the worsening storm they now face. Immediate intervention in the commercial energy market is essential to avoid dire consequences.”
In her letter, Nicholls calls on the Chancellor and Business Secretary to introduce ‘a comprehensive package of measures to the end of March 2023’, including a business rates holiday for all hospitality premises, with no caps applied; deferral of all environmental levies; the reinstatement of a generous HMRC Time to Pay scheme; and the reintroduction of a trade credit insurance scheme for energy.
She also wants to see the April 2022 increase in the VAT rate for hospitality from 12.5% to 20% reversed, to help the economy to keep growing.
Nicholls writes:
“This package of five measures will ensure the survival of businesses, the continuation of employment and the flow of wages, restraining inflation and leading to investment in our communities.
“Hospitality is critical to the nation’s recovery from Covid, but it needs support to get through this current crisis, and as quickly as possible.”
