Sunak must extend VAT cut and rates holiday, say hospitality chiefs

The Chancellor must extend the business rates holiday and cuts to VAT to ensure the recovery of hospitality firms in 2021, industry chiefs have warned.

Sector trade group UKHospitality has written to Rishi Sunak demanding further targeted financial support.

Hospitality firms have benefited from a break in business rates and a reduction in VAT on food and soft drinks from 20% to 5%, although both measures are due to expire at the end of March.

The trade group said the Government should enact another business rates holiday for the 2021-22 financial year “to protect communities and repair businesses”.

It also called for the VAT reduction to be extended for the year across hospitality to “stimulate economic recovery”.

Whitbread financials
Whitbread financials

Last week, Alison Brittain, chief executive of hotel and pub giant Whitbread, said she wanted extension of the support schemes as the firm was braced for restrictions to remain in place in some form until after Easter.

She said a move to extend the relief would be a “good policy decision for the Government, because hospitality does have the opportunity to bounce back and help the economy recover as and when we come out of this pandemic”.

The Confederation of British Industry (CBI) also backed extensions and called for further furlough support in its Budget submission earlier this week.

UKHospitality also urged the Chancellor to use the forthcoming Budget to defer tax payments to December and to improve support for the hospitality sector’s supply chain.

Kate Nicholls, chief executive of UKHospitality, said the industry has “lost around 650,000 jobs” due to the impact of the pandemic.

“Thankfully, many more businesses have managed to adapt and are still managing to cling on, keeping jobs safe and giving their staff, customers and communities hope that they will be able to reopen once the vaccine rollout makes it safe to do so,” she said.

“A wide-ranging package of financial support will give hospitality businesses the best chance of not just surviving the remainder of the crisis but leading the UK’s economic recovery in the years ahead.

“If we get what we need, hospitality can spearhead the economic recovery of the country, revive high streets and provide employment and investment in every single region.”