VAT cut and rates holiday extensions ‘crucial’ to survival of UK hospitality

Extending the VAT cut and the business rates holiday are top priorities for the hospitality sector if businesses are to survive beyond the winter, according to new research published by the UK’s leading hospitality and pub trade bodies.

Research by CGA for UKHospitality, the British Beer and Pub Association (BBPA) and the British Institute of Innkeeping (BII), found support on VAT and business rates are top of hospitality’s essential business support needs, with removal of curfew restrictions and allowing household mixing in venues also vital to survival.

In the survey of 400-plus businesses who operate more than 20,000 venues across the UK, at least half said an extension of the government’s business rates holiday was crucial.

Four in 10 also stated that the government needed to extend its VAT cut to beyond March to help their businesses remain viable.

One in four felt that enhanced grants to enable them to meet at least some of their costs whilst closed, was vital.

The research also pointed to a cut in beer duty, with more than a third of brewers stating it should be a government priority on reopening, as did one in five pubs.

The trade associations say the government must now deliver this urgent support the sector requires to help ensure its very survival, as it revealed earlier this week that 72% of hospitality and pub businesses could become unviable and close in 2021.

In a joint statement, the trade bodies said: “Slashing hospitality VAT and introducing a business rates holiday for the sector were critically important moves earlier in the crisis. They eased the financial burden on businesses and boosted trade at a time when the sector needed all the help it could get.

“But with 72% of hospitality and pub businesses fearing they could close in 2021, they still need more support now. Many businesses are only just clinging on, so the VAT cut and rates holiday must be extended as a priority. In the immediate term extending grant support is crucial.

“For pubs and brewers especially, a cut in beer duty is also needed on top of VAT and rates support.

“Beyond these, there is still much the government can, and should, do to give beleaguered businesses a fighting chance of survival. This includes getting as much of the sector open as possible at the start of December.

“Rethinking the arbitrary 10pm curfew, which hamstrings venues, is a must. We also need to review the ban on household mixing inside venues in Tier 2 regions, which is keeping friends and families apart.

“The restrictions being imposed on businesses before we went into the second lockdown were strangling trade and putting people out of business. If we exit this lockdown into similar, or worse, tighter, restrictions, it is going to be the end for thousands of businesses.”