Travel industry welcomes VAT cut and furlough bonus, but calls for more urgent support
Published on Wednesday, July 8, 2020
ABTA says Chancellor Rishi Sunak’s emergency Budget was a ‘missed opportunity’ to support outbound tourism.
And UKinbound said more needs to be done to help inbound tourism businesses who are ‘on the brink’.
Meanwhile the meetings and events industry said there was no specific support in the Budget for MICE businesses, which have been forced to shut down for months.
Instead, the Budget focused on financial support for domestic tourism, including slashing VAT for six months.
An ABTA spokesperson said: “We welcome the Chancellor’s announcement, as it is good news for domestic tourism.
“However, the lack of backing for outbound tourism represents a missed opportunity, as this is a sector that directly provides 220,000 jobs right across the UK and is in urgent need of tailored support.
“We shall continue to press for additional support measures for the travel and tourism industry in the coming weeks.”
What did Sunak announce?
VAT on tourism and hospitality will be cut from 20% to 5% for six months from July 15 until January 2021.
The cut will apply to all businesses, including B&Bs, theme parks, attractions and restaurants.
Sunak also announced a new Job Retention Bonus scheme, which will see the Government paying employers £1,000 for every furloughed employee they bring back to work, as long as they are retained at least until January 2021.
Sunak said: “Our message to businesses is if you stand by your workers we will stand by you.”
Under a new Kick Start scheme to create jobs for the under 25s, the Government will pay the wages of trainees for six months for a minimum of 25 hours a week, paying at least the minimum wage.
It will also pay £1,000 to employers for each new trainee, and £2,000 for each six-month apprenticeship place filled, plus an additional £1,500 for hiring apprentices aged 25 and over.
To help pubs and restaurants, the Chancellor announced an ‘Eat Out to Help Out’ scheme, giving diners discount vouchers, offering up to £10 off a midweek meals in pubs and restaurants in August.
It’s good, but not enough say trade bodies
UKinbound CEO Joss Croft said: “The chancellor’s economic recovery plan clearly recognises the value of hospitality and tourism, and cutting VAT from 20% to 5% and the Eat Out to Help Out scheme will deliver immediate positive impacts for businesses and consumers.
“The Job Retention Bonus Scheme will also help tourism and hospitality businesses, but only those that survive into next year.
“These measures will not help the many businesses involved in inbound tourism who drive regional economies and jobs, and who are on the brink; longer-term support will still be required for these businesses, which have been hit even harder than domestic and outbound.”
Lex Butler, chair of MICE industry body HBAA said: “Yet again the Chancellor and the Government have not listened to the many outspoken voices of the business events and meetings industry asking for financial help to save jobs and keep the industry alive. Why is this sector being excluded?
“HBAA has tirelessly lobbied for our voice to be heard and for actions to take place, whilst working in collaboration with other industry associations.
“Whilst we support and welcome the boost to hotel accommodation, restaurants and leisure attraction businesses, how and when will business events and meetings industry be considered? We need to save ‘jobs, jobs, jobs’ in the £70bn business events, accommodation and meetings sector now.
“We do welcome the short term cut in VAT for hotel accommodation, food and leisure attractions and the Eat Out to Help voucher which will all support customer confidence, and we also welcome the job retention bonus, the Kick Start and trainee schemes, apprenticeship funding and green jobs.
“Sadly, these great initiatives and opportunities to take on young people and train them are arriving just as others are leaving the industry at the same time through redundancies.
“We need financial support immediately. We need a reduction in VAT for our sector, on venue bookings and event organising services, and we need a delay in paying corporation tax to support the many businesses which are in dire financial straits.
“The only good news today for the business events and meetings sector came before the Chancellor’s statement in Prime Minister’s Questions when, in answer to a question from Stephen Hammond MP about events, the Prime Minister said that there would be ‘news later in the week.’ We can only hope that it is good news.
“The news we desperately need is a start date for meetings and events. Although hotels have re-opened they are unable to host meetings and many conference centres and event venues remain closed. Many restaurants also rely on corporate groups, so the hospitality industry is only really half open and barely able to operate profitably due to the lack of business from the events, and meetings sector.
“Business events are now able to take place in Belgium, Germany, Netherlands and Switzerland but not in the UK, so the UK economy is losing income to these countries. Why are we so different?
“This £70bn industry was thriving and making a major contribution to the economy. It only needs support because social distancing will make it one of the last to reopen. We need a start date urgently and financial support to keep it alive.”
However, CEO of the Business Travel Association Clive Wratten gave a qualified welcome to Sunak’s Budget.
“Today’s announcement gives a limited kickstart to our industry,” he said.
“We welcome the support for returning employees to work and the VAT reduction for UK accommodation. Public confidence will be buoyed by discounted eat-outs in August, allowing for trust in the safety of business travel to grow.”
British Tourist Authority chairman Sir Patrick McLoughlin said: “The Chancellor’s statement today shows the continuing Government commitment to the tourism sector and the millions of people employed within it.
“The package of measures including a major cut to VAT will help the industry as it starts to rebuild and to compete for international visitors while encouraging domestic visitors to get out and enjoy the summer. The key for success will be ensuring that we continue to attract domestic and international visitors through the autumn and extend the season.”