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Chancellor should extend business rates holiday and VAT cut to ensure tourism and hospitality businesses bounce back

Chancellor should extend business rates holiday and VAT cut to ensure tourism and hospitality businesses bounce back

These businesses can spearhead the revival of the UK’s economic recovery in the months and years to come, writes Steve Double MP. | PA Images

4 min read

Hospitality and tourism are the bedrock of our local economy and will be absolutely central to pandemic recovery.

As the MP for a coastal constituency, I have seen first-hand the impact that Covid-19 has had on the hospitality and tourism sectors over the past year. These industries, that are the lifeblood of communities like mine across the UK, have been forced to shoulder a previously unthinkable burden, enduring a year of restrictions, losing key peak months for tourism, and having to survive with significantly reduced trade.

Pre-pandemic, nationally, hospitality employed over 3.2 million people – the 3rd largest sector in terms of employment – and generated £130 billion in economic activity, contributing £39billion in tax each year. The scale of the devastation on the sector has been such that already, 500,000 seasonal workers have not been taken on over the course of the last year, while over 600,000 sector jobs have been lost. As of February, close to 90% of remaining workers remain furloughed.

The government has acknowledged this and singled-out the sector for exceptional financial support that is rightly regarded as unprecedented. The support provided by the government has been crucial in ensuring that many businesses remain afloat and valuable jobs across the country remain open for workers to return to once the crisis has passed.

Hospitality has almost weathered this storm and is ready to roar back when the vaccine rollout is complete

With the 2021 Budget mere weeks away, it is important to recognise two pieces of support which have been critical in providing breathing-room for businesses to survive the crisis of the past twelve months: the business rates holiday and cutting the rate of hospitality VAT to 5%.

As chair of the APPG for hospitality and tourism, I hear first-hand from businesses the positive impact that an extension of these key measures in the Budget would have on their businesses. An extension of the VAT cut would help to stimulate economic activity as restrictions are phased out, while a business rates holiday would help businesses rebuild after the crisis, providing breathing space to meet costs and debts accrued in nearly a year of closure.

Hospitality has almost weathered this storm and is ready to roar back when the vaccine rollout is complete. Getting the right support measures in place for this ‘final push’ will benefit communities right across the UK. This is a sector that is worth supporting. You only need to look back a few years to the aftermath of the 2008 financial crisis. Following the crash, 1 in 6 of all new jobs created in the UK were in the hospitality sector – half a million new jobs. People will be champing at the bit to socialise with family and friends again as soon as they are able and it is safe to do so, and that is where hospitality comes in.

One of hospitality’s great strengths is that it is as important socially as it is economically. For many villages, towns and cities their pubs, restaurants, coffee shops and bars are focal points around which social lives revolve. Hotels, holiday parks and visitor attractions are all parts of the great British holiday. These businesses contribute to a local sense of identity and cohesion and provide enormously valuable community hubs. There are areas, such as coastal and rural communities, including my own constituency, where we know these businesses are even more important. They are the bedrock of the local economy and will be absolutely central to the success of local economies in the years that follow this pandemic.

Possibly more than anything, a return to frequenting our local pubs, bars, restaurants and cafes will provide a sense that life is indeed returning to ‘normal’. I know it is among the things many people are longing for and provides a focus for our hope and optimism for the future. Hospitality will be a central part of our social recovery.

These businesses can spearhead the revival of the UK’s economic recovery in the months and years to come. It will be hard graft, but the hospitality sector is prepared, as it has done before, to roll its sleeves up and get on with the job.

I hope that the government will consider extending both the VAT cut and the business rates holiday for the sector, supporting hospitality and giving businesses the tools to do what they do best.

 

Steve Double is the Conservative MP for St Austell and Newquay and chair of the APPG for hospitality and tourism.

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