UK hospitality industry receives VAT cut and voucher scheme

UK hospitality industry receives VAT cut and voucher scheme

As a response to the sector’s call for support, the U.K. government offered new initiatives, particularly for restaurants and other hospitality-related businesses, to alleviate the pandemic’s impact.

It appears that the coronavirus crisis has left the U.K. hospitality industry with the biggest financial dent among other sectors. In a letter signed by 120 tourism and hospitality leaders, the sector warned that most businesses would not be able to recover without the government’s help.

The bosses also argued that the closure of late-night and leisure economy undermines job security, suggesting a “fightback fund” to prevent businesses in the said sector from closing.

As a response, Chancellor Rishi Sunak has recently introduced a new scheme tailored to the U.K. hospitality industry’s request.

Sunak offers measures to support the U.K. hospitality industry

During Rishi Sunak’s summer statement last week, the Chancellor announced that he would slash VAT for some parts of the hospitality sector from 20% to %5. The VAT cut applies to food (both dine-in and takeout), accommodation, and attraction businesses and will run starting July 15, 2020, up to January 12, 2021.

Chancellor Sunak also introduced a voucher scheme called “Eat Out to Help Out” that will give customers a 50% discount for every dined in meals in restaurants, cafes, as well as pubs across the U.K.  The program, however, will be valid throughout the month of August and between Monday and Wednesday only.

“This will give these businesses the confidence to maintain their staff,” Sunak said.

UK hospitality industry receives VAT cut and voucher scheme

Both initiatives, when combined, will cover 150, 000 businesses and will support more than 2.4 million hospitality and tourism employees across the country.

Hospitality sector can help create new jobs

In the letter submitted by the U.K. hospitality industry, the bosses also emphasized the sector’s major role in creating new jobs following the coronavirus pandemic. The group stressed that the industry has a record of providing new jobs even after a crisis and assures that—with the help of the U.K. government—it can do it again.

In the letter, the bosses wrote:

“In the decade that followed the financial crisis hospitality consistently created around one in six new jobs thanks in part to the VAT cuts and investment in youth employment and training introduced in the immediate aftermath.”

The leaders also emphasized that “physical hospitality cannot be replicated digitally” unlike others and urged to support the industry’s recovery.

As of this writing, the pandemic has brought the U.K.’s unemployment rate to rise by 3.9%. But with a looming resurgence of COVID-19, also known as the ‘second wave,’ OECD said it could climb as much as 15% if not prevented.

Images courtesy of StockSnap, Life-Of-Pix/Pixabay

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