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Hospitality VAT cut considered as industry bodies call for further action

08 July 2020 by

Chancellor Rishi Sunak is set to unveil a series of measures to create more jobs for young people and further support the hospitality industry in a statement today.

The kickstart programme may include a VAT cut for the hospitality industry along with a £2b work placement scheme.

Sunak will present his plans at 12:30 today after Prime Minister's Questions. It will include measures to tackle the prospect of mass unemployment as the furlough scheme winds down.

Part of the programme will include plans to pay the wages of young people on work placements, with the government picking up their basic pay, which can be topped up by employers.

The government would contribute £5,500 over half a year to the 16- to 24-year-olds, who would otherwise be on universal credit, while operators will receive £1,000 for taking them on.

Speaking ahead of the statement, Sunak said: "Young people bear the brunt of most economic crises, but they are at particular risk this time because they work in the sectors disproportionately hit by the pandemic.

"We also know that youth unemployment has a long-term impact on jobs and wages and we don't want to see that happen to this generation. So we've got a bold plan to protect, support and create jobs — a Plan for Jobs."

Meanwhile, hospitality trade bodies have delivered a joint letter to the chancellor calling for further financial support for the sector.

The letter, signed by the chief executives of UKHospitality, the British Beer and Pub Association, the British Institute of Innkeeping, the Society of Independent Brewers, the Campaign for Real Ale and Pub is the Hub, calls for measures including:

• Delivery of grants to all, including those that initially missed out, with the abolition of the £51,000 threshold for eligible hospitality businesses

• Full furlough to be extended for hospitality – they propose that pubs do not have to contribute to furlough costs before November

• Government support on rent – building on the Code of Practice with a grant scheme to incentivise agreement between landlord and tenant on rent liabilities

• A cut VAT to 5% for tourism and hospitality – applying to food and drink, accommodation and tourist attractions

In a joint statement, the trade bodies said: "The employment, revenue and social value for communities provided by pubs will be vital to the recovery of our economy as we return to a new normal, however, with distancing measures in place, fewer customers and higher costs will severely impact the profitability and survival prospects of hospitality businesses.

"Government has already recognised the importance of our sector to British society and the financial support provided over the closure period has been welcome. We now urgently need to extend that support along with the collaboration of industry leaders with government, to ensure pubs can remain as the essential hubs of their communities."

Photo: Andrew Parsons / No 10 Downing Street

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