Chancellor to introduce furlough scheme replacement and extend VAT cut

Chancellor Rishi Sunak is expected to announce new schemes to protect jobs and prop up businesses as coronavirus restrictions further hamper hospitality operators' ability to trade.

A new proposal, designed to replace the furlough scheme, which ends on 31 October, is expected to take the form of a subsidy arrangement similar to those in France and Germany, whereby the government tops up wages of part-time workers.

According to reports, Sunak is also considering an extension of the cut in VAT on hospitality to 5% until the end of March. Loan schemes may also be extended, and the repayment terms stretched from six to 10 years to reduce monthly repayments.

The new support follows the introduction of restrictions on hospitality that come into force today, including a 10pm curfew for pubs, bars and restaurants and compulsory table service.

UKHospitality chief executive Kate Nicholls said earlier this week: "We need to see an early signal that the VAT cut will be extended through to the end of 2021; that the business rates holiday will continue next year; and an enhanced employment support package specifically for hospitality.

"We agree with the government that we are all in this together. Hospitality has played its part by investing in Covid-secure venues and reassuring their customers.

"Now, it's time for government to demonstrate its commitment to the sector and its recovery – hundreds of thousands of livelihoods depend upon it."

Photo: Andrew Parsons/No 10 Downing Street