Chancellor slashes VAT for hospitality industry and launches his ‘plan for jobs’

Chancellor Rishi Sunak (Credit: HM Treasury / Flickr)

The Government is to cut VAT for the hospitality industry to 5% and introduce an “eat out to help out” discount scheme for diners as part of its plans to restart the economy.

The measures came as part of a wider programme to limit mass unemployment in the months ahead.

Chancellor Rishi Sunak said “the job has only just begun” as he unveiled his own “plan for jobs” this lunchtime.

Sunak told Parliament: “I will never accept unemployment as an unavoidable outcome.”

He detailed a “£4bn catalyst for the hospitality and tourism sector” by slashing VAT for those businesses by three-quarters on food, accommodation and attractions for the next three months.

He also launched a new scheme, “eat out to help out”, which will give a £10-per-head discount for every diner eating out between Monday-Wednesday in August.

Participating businesses will be able to claim the money back each week and have the funds in their account within days, the Chancellor said.

The hospitality sector had 1.4m workers furloughed and remains under huge pressure but Sunak encouraged consumers to find “that new balance between safety and normality”.

Sunak, who has been Chancellor for less than five months, also sought to find a new balance between huge financial support from Government that is deemed necessary and the traditional economic thinking his Conservative predecessors in Number 11.

The Government has already spent £35bn on furloughed and self-employed workers and guaranteed business loans worth nearly £45bn.

Sunak confirmed the furlough scheme would wind down as previously announced, ending in October.

But he launched a new jobs retention bonus that is potentially a £9bn policy to retain people in work.

“If you stand by your workers, we will stand by you,” said Sunak.

Businesses that bring a furloughed worker back will receive a £1,000 bonus if the employee is paid an average of at least £520 per month from November to January.

He confirmed the well-trailled kickstarter scheme, a £2bn programme to pay the wages of 16-24 year-olds starting new jobs that provide training and support.

There were further financial measures for employers taking on apprentices and trainees.

Unemployed people will also be supported, with the DWP getting £1bn to support people back to work alongside funding to double the number of careers advisors.

Other economic stimulus measures were confirmed by the Chancellor in his 25-minute summer economic statement.

A £3bn green investment designed to cut carbon and create jobs will provide vouchers for up to £5,000 for people to insulate their homes while £1bn will be spent on public buildings.

Sunak also increased the stamp duty threshold to £500,000 to March 31, which will take effect immediately. The average cut is worth £4,500 but purchasers can save up to £15,000.

Sir John Peace, chairman of Midlands Engine, said: “I welcome the Chancellor’s Summer Economic Update and wholly concur with the statement that we will not be defined by this crisis but rather by our response to it.

“From the commitment to finding, creating and protecting jobs through to the measures that will enable the levelling up of our economy – with the significant investment that will entail – this was a statement I believe we can and must all get behind.  The collective package of measures announced will undoubtedly provide vital support for our region’s people, businesses and communities.

“I particularly welcome his commitment to supporting young people through the Kickstart scheme, the focus on upskilling and measures to prevent people being lost to the scourge of long-term unemployment.  This must remain our collective focus over the weeks and months to come.

“However, as the Chancellor acknowledged, this can only be the beginning.   As Chairman of the Midlands Engine, I see three clear cut priorities that we must keep firmly in mind as we look to build on the Chancellor’s announcements today.

“First, we need investment in infrastructure.  The Chancellor spoke of Project Speed, the Government’s intention to speed up the delivery and development of infrastructure projects. If we are to get spades in the ground on some of the vital improvement works in the pipeline, for example, Midlands Engine Rail, then Government needs to fund the development of these schemes as soon as possible, so that they are ready to build in two or three years, rather than seven or eight years. Our public transport system needs investment, and I hope such funding will be forthcoming in the autumn Budget. It is essential that we build an integrated transport network across the region and move freight from our roads onto our railways, reducing carbon emissions.

“Second, we need to support our businesses. Our region has a broad base of commercial strengths – including advanced manufacturing, but also agri-food, logistics, health and med-tech. These businesses have to be able to access finance for growth, and the skilled staff they need to accelerate that growth.

“Third, we must amplify our position at the heart of the green recovery the Chancellor spoke of.  The whole of the Midlands region is in the vanguard of pioneering environmental innovation.  The advancing Midlands Engine Development Corporation, based around the East Midlands Toton HS2 Hub, gives us an opportunity to build a new type of transformational development – one with net zero at its heart.

“It is incumbent on all of us now to work together and to seize what I believe to be a once in a generation opportunity to recover and rebuild our economy.  The Midlands is a region of pioneering minds, thriving industry and advanced technology, of inspiring heritage and incredible, determined people.  Covid-19 does not change these facts.  It only deepens our resolve to see this crisis through, to rebuild and to further unlock the potential of our region; transforming the opportunities and outcomes for people across the Midlands for decades to come.”

Click here to sign up to receive our new South West business news...
Close