A leading business group has today urged the Chancellor to implement a radical £35bn set of measures to safeguard 500,000 jobs and save Britain’s ailing pubs, restaurants and local high streets from financial ‘oblivion’ following successive lockdowns and a pre-existing decline in footfall. 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 and high street economies, the Independent Business Network (IBN), which champions the needs of family-run and family-owned businesses across the UK, has called on the Government to implement a swathe of measures, including halving the amount hospitality venues pay in alcohol duty and extending the suspension of business rates for a further 12 months. It is also calling for the existing reduced VAT rate of five per cent for the hospitality sector to be maintained while extending it to include sales on alcohol. Meanwhile, it calling for steps to level the playing field between high street retail and online.
The full list of measures set out in the relief package for the hospitality and high street sectors and their respective costing include:
- 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 – £1.8bn
- Make hospitality investments 100 per cent First Year Allowance (FYA) – £1.15bn
- Continue the suspension of business rates 2020/2021 – £15bn
- Cut VAT rate payable by physical retailers to 14 per cent – £7.6bn.
- Freeze town centre parking fees – £872m
- Reintroduce ‘eat-out-to-help-out’ and complement it with a ‘pro-hospitality’ advertising push – £1.08bn.
A key priority, the report’s authors argue, is the introduction of a rebate for the safety equipment purchased on mass by pubs and restaurants. The IBN argues that in many cases these investments were made on the basis of the tenor of the Government’s announcements at the start of the initial lockdown that, once the spread of the virus had been curtailed, the hospitality sector would reopen.
Instead, the end of the first lockdown merely heralded a period of further Government-led confusion and sporadic convulsions back into lockdown. Venues had made significant investments on the basis of misleading and inaccurate Government advice for equipment that was largely redundant. The compensation rate for these venues should be set at a maximum of £10,000 per individual pub and restaurant, with provision made for a potential 69,000 claimants. In sum, this rebate programme would cost £690m.
Save the High Street
The authors argue that in many cases the fate of the hospitality sector is intimately linked to the future of Britain’s high streets. A strong retail presence in Britain’s high streets increases footfall for the hospitality businesses, while the availability of pubs and restaurants encourages customers to participate in retail shopping.
To simultaneously rejuvenate the family run businesses that dominate both our hospitality and high street retail sectors the report is calling for the Chancellor to level the playing field between the high street and online retail. It is calling for the rate of VAT payable by retailers with a physical retail presence to be cut to 14 per cent, while also extending the abolition of business rates in the 2021 Budget for a further year. Meanwhile, the Government is called upon to undertake a consultation process with businesses, local authorities and business associations to replace the current business rates model by the time of the 2024 general election.
The report also calls for the freezing of parking charges for 2020-2021 – at a cost of £872m – and to only allow a one per cent annual increase for the next five years for car parking, parking permits, and associated fees while putting in place measures for further consultation.
Lastly, the report calls for the reintroduction and expansion of the ‘eat-out-to-help-out’ scheme to include sales on alcohol and to complement it with a nationwide ‘pro-hospitality’ advertising campaign.
Commenting on the publication of the report, chairman of the Independent Business Network, John Longworth, said: “The comprehensive £35bn package of measures we have set out here today are vital to saving our pubs, restaurants and high streets from financial ruin. We urge the Government to adopt them and save up to 500,000 jobs and countless family run businesses from destitution. After all, the parlous state our hospitality industry is facing is a symptom of the Government’s own actions.
“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.
“A further example came last March, as cases in the UK began to rise for the first time, the Government delayed declaring Covid-19 a “notifiable” disease, which led to many pubs and restaurants unable to make insurance claims until this declaration has been made.
“It’s time the Government shows its support for British industry and backs these measures.”