Diners are to be given a £10-a-meal government discount to eat in restaurants this August, while VAT on the hospitality sector will be slashed from 20% to 5% until next January, chancellor Rishi Sunak has announced.
The dramatic moves, designed to stave off a feared wave of hundreds of thousands of job losses in restaurants, cafes, pubs and hotels as the UK emerges from the coronavirus crisis, were announced as part of the chancellor’s emergency mini-budget.
Mr Sunak told the House of Commons that the six-month VAT cut on hospitality and tourism will run from 15 July until 12 January at a cost of £4 billion to the Treasury.
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Declaring that he wanted to see pubs, restaurants, cafes and B&Bs “bustling again”, he said: “This is a £4 billion catalyst for the hospitality and tourism sectors, benefiting over 150,000 businesses, and consumers everywhere – all helping to protect 2.4 million jobs.”
And he said that all diners in qualifying restaurants, pubs and cafes will get a 50 per cent off meals eaten on Mondays, Tuesdays and Wednesdays during August – up to a maximum of £10 a head – with their hosts able to claim the money back from the government. The eating-in discount can be used as many times as you like between 3 and 31 August and covers food and drink, but not alcohol, and cannot be claimed on takeaways.
“Meals eaten at any participating business, Monday to Wednesday, will be 50% off, up to a maximum discount of £10 per head for everyone, including children,” he said.
“Businesses will need to register, and can do so through a simple website, open next Monday.
“Each week in August, businesses can then claim the money back, with the funds in their bank account within five working days.”
Around 130,000 businesses are expected to be eligible for the £10 Eat Out to Help Out scheme, including 85-90 per cent of pubs that serve food.
The scheme – forecast to cost the Treasury around £500 million – is expected to cover venues employing as many of 1.8 million people who are disproportionately young and female, and the discount scheme is designed to support jobs among groups who are feared to be most vulnerable to unemployment as a result of the coronavirus crisis.
Overall, 2.4 million people – 8 per cent of the UK workforce – rely on hospitality, accommodation and attractions for employment, of whom 1.4 million have been furloughed in one of the sectors hardest hit by lockdown.
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Some 80 per cent of businesses in the sector are believed to have shut their doors since March, with many not reopening until Boris Johnson relaxed lockdown restrictions on 4 July.
Announcing the moves Mr Sunak said that getting customers back into restaurants, cafes and tourist accommodation would be “the best jobs programme we can do”.
“I know people are cautious about going out,” he said. “But we wouldn’t have lifted the restrictions if we didn’t think we could do so safely.
“I’ve seen in the last few days how businesses are working to make their premises safe and if we follow the guidance and respect what they ask us to do, we can all enjoy summer safely.
“In turn, we need to give these businesses the confidence to know that if they open up, invest in making their premises safe and protect jobs, demand will be there and be there quickly.”
The chief executive of food delivery company Deliveroo, Will Shu, welcomed the announcements.
“While restaurants may be able to open their doors again, without this new government support many would simply not survive while social distancing measures are in place,” said Mr Shu. “This tax cut will be an important lifeline for both small independents and high street family favourite restaurants.
“It is also a recognition from the Government of just how important this sector is to our economy and to our communities. The Government has taken a number of positive steps to help the restaurant community during the pandemic and we will keep working with our partners to make sure they get the support needed to avoid us losing this essential element of British life.”
But the trade body representing nightclubs and late-night entertainment venues said that the measures would leave large parts in the sector in grave financial difficulty.
Michael Kill, chief executive of the Night-Time Industries Association said: “Whilst there is much to be welcomed in this announcement for many businesses, it leaves many in our sector beleaguered. Most of our members either can’t open at all due to social distancing, or can only open with reduced capacity resulting in more financial losses.
“It’s as if the Government are letting us slip through the cracks between the various well-intentioned schemes. A VAT cut when you just can’t open at all is not of any help. Late-night venues in towns and cities across the country are facing catastrophe. That will be a tragedy for the business owners, their staff and their customers.
“But there will be a consequential set of problems when people, particularly youngsters, are left with nowhere to go for music and social entertainment. Instead, we’ll see a further rise in illegal raves and street parties and all that this will entail. We renew our call on the government. You have to help us more with direct financial support.”