Restaurant and Bars: Cautious welcome for Budget 2021 support measures

05 March 2021

The hospitality sector, when not restricted by coronavirus, employs around 3.2 million people, produces £130 billion of economic activity and generates £39 billion in tax for the UK Government. It is the third largest private sector employer, representing 10% of UK employment, and a vital part of our social fabric. Therefore, support for businesses across the sector which are shut or working under extremely challenging conditions, and will continue to do so for a sustained period of time, is vital if we are to avoid an avalanche of devastating consequences.

We welcome the measures introduced by the Budget with the extension of the furlough scheme, additional grants, VAT reductions for the next 12 months, the extension of the business rates holiday and then discount for the rest of the financial year and the scrapping of duty increases on alcohol. We were pleased to see an increase in the recruitment inventive which should act as a real boost to employment activity as recovery builds and similarly, the investment relief could see some much needed capital expenditure improving our high streets and community hubs.

All of this support though will only help if businesses are able to trade from their existing sites going forward and so the real focus now needs to be on the ever increasing rent debt. The moratorium on rental debt needs to be extended as a matter of absolute priority with a clear plan on how the debt mountain can be unwound over a long term period.

We also reflect on the potential for the Chancellor to reflect on what else he may be able to consider as the recovery begins to build. There is something of a missed opportunity if the VAT rate is not kept at a reduced level in the long term – this would make us more competitive with other European countries and reflect the fact that much of the hospitality sector will not be able to bounce back immediately on being able to re-open. Likewise, there is now an opportunity to complete the review into business rates and create real reform which enables a strong and stable footing allowing communities to rebuild in a future proof manner.

All of the support announced is predicated on the cautious but irreversible unwinding of restrictions being delivered, and while following the data is clearly the national imperative, if there were revisions to the timetable announced by the Prime Minister in the easing of restrictions then additional support measures would be absolutely critical.