United Kingdom

Rishi Sunak told to keep VAT cut for pubs and restaurants in place for another YEAR

Rishi Sunak has been urged to extend a massive cut to VAT for pubs and restaurants to cover alcoholic drinks and keep it in place for another year in order to rescue the ailing hospitality industry. 

The chancellor lowered the rate to 5 per cent last year for food and soft drinks and is planning to keep it in place until at least June, when it is hoped Britain will return to something approaching normal life. 

But MPs and business leaders are demanding the rate stay in place for another 12 months, saying a return to the 20 per cent standard rate would strangle the sector's recovery. 

In an additional boost for pubs and bars that have been closed for much of the last year they also want it to be extended to alcoholic 'on sales' to allow them to compete with off-licences. 

Under plans unveiled by Boris Johnson last week, pub gardens will reopen from April 12. But indoor sales are not expected to start until May 17 - with social distancing.

More than 80 MPs have signed a letter organised by the  All-Party Parliamentary Group for Hospitality and Tourism backing the change.

They also want it extended to tourism and leisure industries, plus an extension of the business rate holiday to cover the next financial year.

Hastings and Rye Tory MP Sally-Ann Hart, who co-chairs the APPG, said: 'Our hospitality and tourism sectors are some of the best in the world. They are a fantastic social as well as economic asset and we should be immensely proud of them. 

'They have been absolutely devastated by Covid, though. Despite unprecedented financial support from Government, unfortunately many businesses have been lost and they have taken hundreds of thousands of jobs with them. 

The chancellor (right) lowered the rate to 5 per cent last year for food and soft drinks and is planning to keep it in place until at least June. Hastings and Rye Tory MP Sally-Ann Hart (left), who co-chairs the APPG, said: 'Our hospitality and tourism sectors are some of the best in the world'

'These are businesses that are critical to communities around the country. They are focal points for social lives and drive inward investment. Ongoing Government support through to the end of the pandemic and through the recovery phase is critical to rebuilding this industry and creating jobs.'

Yesterday Mr Sunak said that the hospitality industry remained 'uppermost in my mind' as he was asked to provide more help.

He was responding to a plea from supermodel-cum-pub landlady Jodie Kidd.

Speaking to Times Radio he said: 'For me it's always been important to try and do what I can to support that industry. That's why the grants today are really important...

'We have cut VAT from 20 per cent to 5 per cent temporarily for that industry. We've cancelled all their business rates over the past twelve months. It's because I care about that industry and the people who work in it that I want to try and do what I can for those jobs. 

'They should feel reassured that they remain uppermost in my mind and you will see what we're going to do in a few days' time.'

In a letter to the chancellor today, 83 MPs highlight the damage to the hospitality industry.

'In 2020, the hospitality sector has seen a sales drop of 53.8 per cent, equating to a loss in revenue of £72 billion,' the wrote.

'This decline has impacted the UK's national economy by taking off around 2 percentage points from total GDP. For hospitality, this downturn is already estimated to be over 10 times worse than the impact of the financial crisis. It is estimated that employment in the sector has dropped by over 1 million jobs.'

Signatories to the letter include MPs from the Conservatives, Labour, the Liberal Democrats, the SNP, the DUP, the SDLP  and the Green party. 

UKHospitality chief executive Kate Nicholls, added: 'The support of so many MPs from all parties and from the four nations of the UK emphasises just how important the hospitality and tourism sectors are – and how desperately they need the Chancellor's help at Budget. 

'Our sectors can be the engine of recovery, rapidly creating jobs and tackling youth unemployment. The Chancellor can speed this recovery with extensions to the VAT cut and business rates holiday for the next year.'

In a letter to the chancellor today, 83 MPs highlight the damage to the hospitality industry

Mr Sunak is also coming under pressure from northern Conservatives to support high streets by permanently reducing business rates for retailers.

Forty-five MPs from the Northern Research Group (NRG) called for an extension of the business rates holiday to be followed by 'fundamental reform' after the coronavirus pandemic.

Ahead of the Budget on Wednesday, the Tories led by former minister Jake Berry said there is a need for 'levelling the playing field between bricks and mortar and online retail'.

They are demanding that business rates are reduced from about 50% of market rent to around 35 per cent in order to help achieve this.

'With many of our town centres hit particularly hard by the Covid-19 pandemic, now is the time for a bold move to reduce business rates nationally,' the MPs said in a letter to Mr Sunak.

'We need to make sure that once people can go shopping again, they have high streets to go back to.'

Ahead of the Budget this week, Mr Sunak announced that pubs, restaurants, shops and other businesses hit hardest by the coronavirus pandemic will be boosted by a £5 billion grant scheme to help them reopen as the lockdown is eased.

The 'restart grants' will be worth up to £6,000 per premises to help non-essential retailers reopen and trade safely, with 450,000 shops expected to be eligible.

About 230,000 hospitality companies, hotels, gyms, as well as personal care and leisure firms, are estimated to be eligible for up to £18,000 per premises as they are due to open later under the plans for easing lockdown.

Separate from the Budget, Mr Sunak is considering targeting online retail giants like Amazon with a sales tax in a move that could go some way towards levelling the playing field as part of the business rates review expected later in the year.

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