Peter Ducker FIH wrote to Rishi Sunak MP last week asking him to extend the VAT and business rates cut for hospitality businesses.
We would encourage our Members to do the same.
Rishi Sunak MP
Chancellor of the Exchequer
11 Downing St, Westminster, London SW1A 2AB
12th February 2021
Budget 2021: How hospitality can help drive UK growth and prosperity
As you make the final preparations for your Budget on 3rd March, you will no doubt be trying to reconcile the ongoing costs of supporting businesses through this latest phase of the pandemic with the prospect of people being able to return to work in large numbers later this year, thanks to the roll out of the Government’s vaccine programme.
As representatives of leading businesses in the hospitality sector we want to play our role in our nation’s economic revival. Given the right fiscal support in March, and safe and sustainable trading conditions in place, we can help this country ‘bounce back’ from the pandemic in a safe and responsible way.
Last July, you rightly identified that a cut in VAT for hospitality and tourism to 5% would be a practical and helpful way to allow companies like ours to invest in safeguarding the futures of our business and the jobs of our employees. This was indeed the case, albeit only in the very limited time during which we could trade freely.
Extending the VAT cut until the end of the coming tax year will allow us to better make use of this positive measure, stimulating the economy and helping businesses to stay afloat. Should we be allowed to reopen in the run up to Easter, it could also help us avoid having to pass on substantial price rises to customers in early April, just prior to the Easter trading weekend. This measure will be critical to boosting employment, particularly in 16-24 year olds.
In addition, the business rates holiday has been a lifeline for struggling businesses like ours during COVID. It is equally vital that this measure is extended by a year to afford us a sustainable recovery. The ravages of the pandemic mean that the rateable values upon which business rates are factored, are now significantly out of kilter with actual property values, so it would be grossly unfair to apply this tax as it stands. An extension would also assist with a resolution of the rent debt mountain that has accrued over the past year.
Alongside these two hospitality-specific measures we would like to see support offered to business in general to increase liquidity through improving loan repayment terms, deferring Government-owed debt and replacing the Job Retention Bonus. Finally, an extension of furlough would allow us to keep our workforce employed as the sector hopefully is allowed to carefully reopen in the Spring.
In the aftermath of the financial crisis of 2008, it was businesses like ours in the hospitality sector that generated growth and offered employment to many, particularly those in deprived areas. We can do so again with a presence in towns and cities and rural and seaside communities right across the country. Thank you for your support to date and we look forward to working with you to champion the nation’s recovery in the months and years ahead.
Peter Ducker FIH
Institute of Hospitality