‘Jobs and livelihoods’ support sees furlough extended and £5bn for hospitality and leisure
The Chancellor has revealed his plans for the road to a post-Covid recovery as he laid out several measures to protect jobs and livelihoods, vowing to do “whatever it takes” to help businesses and people.
Plans include a £5bn scheme to help high street businesses including hospitality and leisure open, funds for museums, theatres and galleries, as well as an extension to the furlough scheme.
Rishi Sunak says the measures to support the economy amounted to £65bn over this year and next, taking the total Government support to £407bn over that period.
He told MPs the total Covid-19 support package amounted to £352bn.
He added: “Coronavirus has caused one of the largest, most comprehensive and sustained economic shocks this country has ever faced and, by any objective analysis, this Government has delivered one of the largest, most comprehensive and sustained responses this country has ever seen.”
The key measures to help businesses include;
Furlough extended until the end of September: For workers, the terms will not change, he added.
Self Employment Income Support scheme extended to September 2021: 600,000 more people who filed a tax return in 2019-20 now able to claim for the first time.
£5bn for new Restart Grants: Non-essential retail businesses which will open first will receive grants of up to £6,000 per premises and hospitality and leisure businesses, including personal care and gyms, which will open later, or be more impacted by restrictions when they do, will be given grants of up to £18,000.
New Recovery Loan Scheme: This will replace the Bounce Back Loan and CBIL schemes which are coming to an end. It will make available loans between £25,000 and £10m, and asset and invoice finance between £1,000 and £10m.
Extension of the Film & TV Production Restart scheme in the UK: £300m will be provided to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.
Extension to the VAT cut to 5%: This is aimed at the hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022. 750,000 eligible businesses in the retail, hospitality and leisure sectors in England will also benefit from business rates relief.
Support for arts and sports: £300m support for major spectator sports, supporting clubs and governing bodies in England and £90m funding to support government-sponsored national museums in England due to the financial impact of Covid-19.
Sue Rathmell, indirect tax partner at MHA MacIntyre Hudson, says that the Chancellor’s extension of the reduced VAT rate and the furlough scheme as well as his promise of cash grants allow the UK hospitality sector to breathe a sigh of relief:
“The UK hospitality sector is breathing a sigh of relief as the Chancellor seem to have listened to its pre-Budget requests. In particular, the extension of the 5% VAT rate for the UK hospitality sector for an additional six months up to the end of September 2021 is good news for businesses in the sector as it will cover the much important summer season. It was even more reassuring to see that in addition from 1 October 2021 to 31 March 2022, the VAT rate will increase to 12.5% before it returns to 20% with effect from 1 April 2022.
“With the lockdown easing over the next three months, tourism and hospitality businesses in the UK will be hoping that this VAT reduction will encourage the UK public to stay in the UK this year and make the most of UK resorts and destinations whilst supporting UK businesses. They desperately need a good summer 2021 season to help save jobs and shore up finances to be able to survive the current crisis.
“The extension of the furlough scheme to the end of September is also a much needed move. Although we wait for further details of new schemes such as the cash restart grants of up to £6,000 and the £18,000 for hospitality and leisure businesses they will be welcomed by the sector. Finally, there will be an extension of the business rates holiday for the retail, hospitality and leisure sectors until the end of June 2021 and reductions of up to two thirds for the rest of the year.
“The regrowth of the hospitality sector will not only be dependent on these measures but also on the successful reinvigoration of the UK’s high streets and city centres – encouraging people back into towns and cities will support pubs, restaurants, hotels, cinemas and theatres. The Chancellor has put together a package of measures that we hope will support the sector to get up and running again as Covid-19 restrictions are lifted.”