“Urgent” support required for UK hospitality industry

UK: Industry leaders from around 120 UK hospitality and tourism businesses have warned Prime Minister Boris Johnson that the sector requires “urgent” support in order to prevent “widespread devastation”.

The leaders and CEOs have signed an open letter urging the government to provide aid and investment for the sector, as well as reduced VAT, deferred tax bills and grants to cover rental debts, otherwise they say the industry will struggle to survive even with the easing of the nationwide lockdown over the weekend.

Writing in a letter that was made public by the BBC, bosses wrote: “Hospitality businesses operate with very high fixed costs and labour costs are the only flexible point to absorb this suppressed demand. Many parts of the late night and leisure economy, as well as activities such as events and conferencing in our hotels, have no provisional date for reopening and this is impacting confidence and undermining job security.”

Hospitality trade association UKHospitality expressed its confidence that the industry would be able to recover but in order to do so, the government would have to provide extra support for the rest of the year and into the next.

Industry leaders have drawn up a set of recommendations for the government to follow, which include:

  • Automatically extending the deferral of all tax liabilities that are due in July
  • Providing a grant to cover a proportion of rent debt during closure, reopening and recovery
  • Temporarily reducing VAT to five per cent for tourism services
  • Extending furlough for hospitality businesses to protect jobs
  • Doubling the employer National Insurance contributions threshold to protect a return to part-time work
  • Extending the hospitality business rates holiday to March 2022

The leaders continued in their letter: “In the decade that followed the financial crisis hospitality consistently created around one in six new jobs thanks in part to the VAT cuts and investment in youth employment and training introduced in the immediate aftermath. We can do so again.

“Physical hospitality cannot be replicated digitally online, in the same way that some form of retail can be. We therefore urge you and your colleagues across government to work with us to stimulate demand and support the sector’s recovery,” they added.

In addition, the Labour Party has called for the government to set up a £1.7 billion “fightback fund” to prevent firms going into liquidation over the coming months and allow councils to allocate funds to those businesses which are struggling most during the pandemic.

Chancellor Rishi Sunak previously announced that the government’s job retention scheme had salvaged 9.2 million jobs, as he created special business rates targeted at companies in the hospitality, leisure and retail sectors.

Industry figures say that hospitality and tourism have been two of the sectors most heavily impacted by restrictions on travel, and doubts will remain in the long-term over their viability with the enforcement of social distancing practises and increased traveller caution.