Hospitality bodies appeal to chancellor for support amid Omicron surge

Published by Scott Challinor on December 18th 2021, 12:01am

The hospitality sector has issued a plea to chancellor Rishi Sunak to provide support for businesses, after the surge in cases of the Omicron Covid variant has rocked consumer confidence.

While hospitality settings have not been ordered to close under Plan B restrictions, fears over Omicron’s spread have seen swathes of consumers cancel their bookings.

Meanwhile, England’s chief medical officer Chris Whitty has called on the public to not “mix with people you don’t have to” and “prioritise social interactions that really matter”, which has discouraged people from venturing out to hospitality venues.

Trade body UKHospitality warned that pubs, bars and cafes have already seen their trade drop by a third, with a further 22 per cent fall in bookings expected for the whole of December.

With no financial support to cover the shortfall, industry groups held crisis talks with Sunak on Friday.

The Confederation of British Industry [CBI], the British Chambers of Commerce [BCC], the Institute of Directors, Make UK and the Federation of Small Businesses [FSB] were just some of the bodies whose representatives attended the discussions.

During the meeting, the British Chambers of Commerce asked the chancellor to revert to the emergency rate of five per cent VAT for hospitality and tourism businesses, and for the government to reintroduce business rates relief for the retail sector.

The BCC also called for additional grant funding, which they suggested could be “administered locally and distributed on a needs basis” to those who require it.

UKHospitality chief executive, Kate Nicholls, said ahead of Friday’s crisis talks: “Christmas trade is always crucial for the hospitality industry, making up as much as a quarter of the year's profit for many businesses.

“Last year Christmas was cancelled and so much rested on this December period for businesses already staggering under a burden of debt incurred from the pandemic and facing rising costs across the board.

“If operators are unable to trade profitably over the next month, many will simply not survive - and those that do make it through face a return to 20 per cent VAT in April.”

Nicholls suggested that the VAT rate could be frozen at 12.5 per cent if not reverted to five per cent, adding that recovery grants should be reintroduced, and business rates put on hold for the first quarter of 2022.

Terence Carvalho, general manager at Becketts hotel and restaurant in Southsea, Portsmouth, is another among the many voices from the sector who is also calling for a package of support.

Carvalho told Portsmouth’s The News outlet: “For me, the one thing the government needs to do going into next year is support hospitality, in terms of supplementing wages like it did with the furlough scheme and looking again at VAT rates.

“We went into 2021 with a five per cent VAT rate. VAT has now gone up to 12.5 per cent and will be back at 20 per cent in March.

“At the moment, there are also confusing messages coming from government as to what you can and cannot do. This is having an impact on our industry and just like any other business we need support. It is unfair we are being penalised because of muddled and unclear rules which we have no control over.”

Prior to Friday's crunch talks with the industry, the chancellor said that the government would do “whatever it takes” to support jobs but pointed out that funding has already been made available for the sector, including a £250 million pot set aside for local authorities to offer out to small businesses as grants.

Sunak said: "Until spring of next year, most businesses in the hospitality industry are only paying a quarter of their normal business rates bill. They are benefiting from a reduced rate of VAT all the way through to next spring.

"And thirdly, there is about quarter of a billion pounds of cash sitting with local authorities that's been provided by government to support those businesses who need it."

Sunak added that his immediate priority was to ensure the £250 million given to local councils reaches businesses that need it “as quickly as possible”.

The chancellor had cut short a trip to the US to fly back to Britain and hold Friday’s talks, having been in California to meet with business leaders there to encourage investment in the UK.

Photo taken from Wikimedia Commons

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Authored By

Scott Challinor
Business Editor
December 18th 2021, 12:01am

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