SMEs In Hospitality And Leisure Sectors Back Sunak’s Generous Giveaway
Small businesses in the hospitality and leisure sectors celebrated joyfully last Wednesday after the Chancellor announced the multi-billion pound giveaway in his mini-Budget.
However, business experts warn that additional help is needed to support other sectors hit by the coronavirus downturn that are not included in Rishi Sunak’s £30bn rescue package. Although pubs, restaurants, hotels and other hospitality businesses were able to reopen on July 4, reduced trading capacity and months of lockdown mean many are still close to the edge.
Mr Sunak’s move to reduce VAT from 20pc to 5pc for food, non-alcoholic drinks, accommodation and particular attractions from last Wednesday until mid-January was greeted as a lifesaver by one of the sectors hardest hit by lockdown. The cut in VAT is especially welcome as it will help the sector to pay bills and debts accumulating over the last three months or so.
Other measures to support all sectors include a £1,000 bonus per employee for employers who bring back staff from furlough and employ them until the end of January 2021, as long as the employees are paid a minimum of £520 on average in November, December and January.
Cash for new jobs, apprentices and trainees in giveaway
Under the £2bn new Kickstart scheme, aimed at creating new jobs, the Government will pay for the first six months of a work placement for staff aged 16 to 24 years of age, a key demographic for the hospitality and leisure industries. Each person will receive the National Minimum Wage for up to 25 hours per week and employers will be free to top up the pay.
Employers will also receive £1,000 for every trainee taken on and will be able to claim for ten trainees in total. Furthermore, the Government will pay businesses up to £2,000 for every apprentice under 25 years of age taken on and £1,500 per apprentice above 25.
The Chancellor has even made the novel decision to boost the dining sector by offering everyone in the UK the opportunity to eat out at half-price from Mondays to Wednesdays during the month of August.
The EAT Out to Help Out scheme means people can enjoy 50pc off meals eaten at participating pubs, cafes and restaurants for the whole of August, up to a maximum discount of £10 per head. Businesses will then be able to reclaim the money from the Government.
SMEs react favourably to giveaway
Gary Turner, MD of small business accounting platform Xero, says he was encouraged to see such a broad package of support for hospitality, the sector by far the most adversely affected by lockdown. Although he was surprised that there wasn’t more support for the retail sector, which is a ‘huge employer and contributor to the UK economy’.
There must be, he adds, many retailers who are now envious of the help being given to pubs in the high street. Mr Turner believes there should be more support for other sectors that were not hit as hard but were still impacted significantly.
Andrew Goodacre, CEO of the British Independent Retailers Association (BIRA), agrees, saying that it was disappointing that there was no cut in VAT for retailers generally and no changes to National Insurance contributions. He believes there ought to be some thought given to how consumer demand is stimulated on the high street, or businesses will close with the loss of jobs.
Additionally, there is concern that job losses are being deferred while the furlough scheme pays the wages of millions. Mr Turner commented that the furlough scheme has definitely helped SMEs across every sector.
Although employment has fallen by only 6pc, there has been a 28pc reduction in retail sales year-on-year across the board, so clearly the scheme has worked by limiting job losses. However, he warned there could be a wave of redundancies in the offing unless the economy recovers.