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Sun 31st Jan 2021 - UKHospitality calls for VAT and rates support after worst year on record
UKHospitality calls for VAT and rates support after worst year on record: The worst year of trading on record has left enormous swathes of the hospitality sector on the verge of collapse, UKHospitality has warned. Businesses urgently require further government investment and support if Britain’s third largest sector can fulfil its potential in helping to drive wider economic recovery, it said. As part of its evidence to the Treasury select committee inquiry into the economic impact of coronavirus, the trade association highlighted four in ten sector businesses stated they would fail by mid-2021. Only one in five have enough cash flow to survive beyond February under present levels of support. Recent figures from UKHospitality’s quarterly sales tracker, in partnership with CGA, revealed the devastating impact of the pandemic to the sector in 2020 – with sales collapsing by 54%, resulting in a loss in revenue of £72bn. The sector’s decline is likely to have knocked off more than two percentage points from total national GDP. It is more than ten times worse than the impact of the 2008 financial crisis for hospitality. The evidence builds on previous submissions given by UKHospitality to the treasury committee and the recent Budget submission to the Treasury. The trade association stated the sector will begin to recover when it is able to reopen, but can bounce back much more rapidly with the right support in place. The sector has two clear proposals to drive this growth – extend the VAT cut to 5% for a further 12 months, and ensure it applies across the broad hospitality sector, to stimulate economic activity; and enact a further business rates holiday for hospitality for 2021-22 to protect communities and repair businesses. UKHospitality chief executive Kate Nicholls said: “Put simply, hospitality is battling for survival. Our sector has been the hardest-hit sector by the pandemic and is staring into the abyss. But if the right conditions and support are put in place, we could be justifiably optimistic of the future role hospitality can play in returning the country to growth and boosting employment. The VAT cut and business rates holiday were two key measures government correctly identified in 2020 that would stimulate economic activity and assist businesses. With subsequent lockdowns and restrictions many in hospitality have been unable to recoup the intended benefits. Extending these measures would act as a critical revival system – saving many jobs and setting up the economy for much need job creation for the rest of the year.” She told The Sun: “Our venues have been shut down and subject to tyrannical tiers for many months since September. The future is grim, with many pubs, bars, restaurants and coffee shops lacking the cash to get through the coming weeks. Fixed costs are mounting up, even with staff on furlough, with no roadmap of when or how they will reopen. So further support is critical in ensuring businesses can welcome back customers in a safe and controlled way. We are desperate to get back open, boost jobs and help the economy grow.” Meanwhile, an analysis conducted by the Labour Party has found 650,000 hospitality businesses are at risk before lockdown ends. A million foodservice and accommodation businesses said they have less than three months of cash reserves left. Shadow business minister Lucy Powell said: “A million firms are struggling with a cash crisis threatening jobs and livelihoods just as the vaccine offers hope. The cost of business insolvencies and unemployment on this scale would take a wrecking-ball to our economy. If the government fails to act on this latest evidence, and doesn’t bring forward an urgent, comprehensive plan, they’ll be guilty of economic negligence that will choke off the recovery, and damage our country for years to come.”

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