Report calls to halve alcohol duty and scrap business rates to save hospitality from ‘financial oblivion'

02 February 2021 by
Report calls to halve alcohol duty and scrap business rates to save hospitality from ‘financial oblivion'

A business group has published a report today urging the chancellor to implement a £35b set of measures to safeguard 500,000 jobs and save Britain's ailing pubs, restaurants and high streets from "financial oblivion" and an "irreversible decline".

The economic collapse in Britain's hospitality sector, responsible for over three million jobs, accounts for roughly one-third of the overall slump in GDP.

To provide urgently needed financial support for the hospitality economy, a report published by the Independent Business Network (IBN), which champions family-run and owned businesses across the UK, has called on the government to halve the amount venues pay in alcohol duty and extend the suspension of business rates for a further 12 months.

It is also calling for the reduced VAT rate of 5% for the hospitality sector to be maintained while extending it to include sales on alcohol.

The list of measures in the report and their respective costing included:

  • Provide hospitality businesses with a Covid investment rebate - £690m
  • Extend hospitality's reduced VAT rates for remainder of 2021 - £6.3bn
  • Include alcohol in hospitality's reduced VAT rates - £750m
  • Cut in half Britain's alcohol taxes - £1.8b
  • Continue the suspension of business rates 2020/2021 - £15b
  • Freeze town centre parking fees - £872m
  • Reintroduce Eat Out to Help Out and complement it with a ‘pro-hospitality' advertising push - £1.08b

A key priority, the report's authors argue, is a rebate for the safety equipment purchased by pubs and restaurants last year. The IBN said venues made significant investments following "misleading and inaccurate government advice" for equipment that was "largely redundant". It said the compensation for these venues should be set at a maximum of £10,000 per pub and restaurant, with provision made for a potential 69,000 claimants. In sum, this rebate programme would cost £690m.

IBN chair John Longworth said: "Successive draconian lockdowns imposed by central government have decimated our hospitality and high street retail sectors to the extent that many are facing the looming prospect of financial oblivion and, in some cases, irreversible decline. The travesty is that much of this damage was entirely avoidable and was a by-product of poor leadership and an ill-informed effort on the part of government to get to grips with the virus.

"For weeks during the first lockdown the government gave those operating in the hospitality industry the false impression that an end to lockdown would bring with it a slow but gradual return to normality. As a consequence of the government's messaging, pub landlords and restaurant owners the length and breadth of the country invested in expensive PPE and other equipment to ensure social distancing and prevent the spread of the virus only to discover that, in fact, the sector would be plunged once again into closure and their equipment investment rendered redundant. In many cases the level of investment exceeded £10,000. Of course it's right, therefore, that the government should step in to provide compensation to these businesses."

Photo: Shutterstock

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