Hospitality businesses will benefit from a business rates holiday extension and VAT cuts to stimulate the market’s recovery, chancellor Rishi Sunak has announced.
Speaking in the Commons during the last hour, Mr Sunak confirmed that business rates relief would be extended for three months until the end of June.
After that, rates will be reduced by two thirds, up to the value of £2m for closed businesses and a lower cap for those who have been able to stay open, until the end of the year.
He also confirmed that the 5% VAT cut for hospitality and tourism businesses would remain in place until 30 September.
From then, an interim rate of 12.5% will be introduced for another six months, with the usual 20% rate not returning until April next year.
Mr Sunak quoted forecasts from The Office for Budget Responsibility that suggest the economy is likely to return to pre-pandemic levels by the middle of 2022, six months earlier than it predicted in November.
However, over the next five years the economy will be 3% smaller than it would have been had coronavirus not struck.
The Chancellor also unveiled plans for a new Recovery Loan Scheme to replace CBILs, with between £25,000 and £10m available through the new scheme.
Sunak also increased the National Living Wage to £8.91 from April and doubled the incentive for employers to take on apprentices to £3,000.
These measures are on top of the extension of the furlough scheme until September, with no change until July.
Employers will then be expected to pay 10% towards the hours their staff do not work in July, increasing to 20% in August and September, as the economy reopens.
Restart grants, of up to £18,000, will also be available for hospitality businesses as part of a £5 billion scheme.
Rob Coleridge, senior associate and consumer sector expert at Irwin Mitchell, described the scheme as a “shot in the arm” for retail and hospitality firms and said it would go some way to helping some of the smaller businesses reopen.
“The announcement recognises that the High Street requires specialist and more bespoke financial assistance, which it desperately needs and I hope that this is not too little too late.
“High Street businesses are dealing with the multitude of issues which for many include the need make major changes to their business.
“Challenges to businesses include pivoting to online sales being their dominant revenue source, innovating in how existing high street premises can be used to add value and to interact with consumers in safe but experiential way, and supporting employees that are reluctant to return to work as a result of Covid anxiety.
“Above all, although we are emerging from Covid, there is still a lot of uncertainty which means businesses need to be robust and agile enough to cope with the exaggerated fluctuations in demand and exciting new opportunities that may arise.”