Hospitality sector to receive much needed boost

10 Jul 2020

Glasses and crockery on a table

The hospitality sector has been one of the hardest hit by Covid-19, with most businesses in complete shutdown. Whilst a number of support measures for businesses were introduced in March, alongside some sector-specific support such as business rates grants, it has been a really difficult period. The road ahead for many businesses looking to rebuild will be long and challenging.

There has, however, been some welcome news recently with parts of the industry being able to re-open from 4 July, and a further announcement on 9 July that pools, gyms, spas as well as certain sporting and performance venues will be able to re-open in stages over the coming weeks to 25 July.  There will, of course, be a number of restrictions and social distancing measures, but positive news nonetheless given that there are an estimated 1.5 million workers in the sector still furloughed. Unfortunately, nightclubs and music venues are still waiting for further information on when they can re-open.

The key to restoring the industry is building consumer confidence, and it appears this is an area of focus for the government. In a survey carried out by The Trust Factor of 1,500 consumers and 200 businesses it is reported that only 30% of consumers are comfortable visiting their local pub and 45% would more likely visit venues they know. Around 18,000 pubs and bars re-opened on 4 July, around 45% of all such venues.

On 8 July, the Chancellor, Rishi Sunak, delivered a financial statement with additional measures to support the UK’s economic recovery from Coronavirus. This included some further support for the hospitality sector in the form of a reduction in the VAT rate from 20% to 5%, set to last from 15 July 2020 to 31 March 2021. Detailed guidance is expected from HMRC shortly but the policy document published by the government confirms the following:

  • A temporary reduction in the VAT rate (from 20% to 5%), which will apply to food and non-alcoholic drinks purchased from bars, pub, restaurants, cafés and similar establishments in the UK; and
  • A temporary reduction in the VAT rate (from 20% to 5%) which will apply to supplies of accommodation in hotels, B&Bs, campsites and caravan parks and also admission to attractions across the UK such as cinemas, theme parks and zoos.

Read more about the VAT changes.

Whilst the reduction in VAT will be a welcome boost for the industry, there is not a lot of time for businesses to understand and implement the VAT changes, particularly at a time when many will be busy preparing for re-opening.

In addition there will be an ‘eating out discount’ to encourage consumers to spend at pubs, restaurants and cafes. Meals eaten at participating businesses, from Mondays to Wednesdays in August, will be 50% off, up to a maximum discount of £10 per head for everyone, including children. A website is expected to be launched on Monday 13 July for businesses to register and firms will be able to claim the money back and receive the funds from the government within five working days. This is further encouragement for the general public to start to return to old habits and it will be interesting to see how effective the measure will be.

Read more about the Eat Out to Help Out Scheme.

This support was announced alongside a number of other support packages available to the wider business community, including a Job Retention bonus of £1,000 per employee brought back from furlough who is still employed as of 31 January 2021. It is hoped that this will help keep more furloughed staff in employment through the recovery phase.  

Read more about the employment support measures announced in the financial statement.

What is reopening and when?

11 July

  • Recreational cricket facilities
  • Outdoor Theatres
  • Outdoor pools

13 July

  • Spas
  • Tanning salons
  • Tattooists
  • Beauticians

25 July

  • Gyms
  • Indoor pools
  • Leisure centres