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Morning Briefing for pub, restaurant and food wervice operators

Thu 24th Sep 2020 - Chancellor creates Job Support Scheme and extends VAT cut but operators warn measures don’t go far enough
Chancellor creates Job Support Scheme and extends VAT cut but operators warn measures don’t go far enough: Chancellor Rishi Sunak has announced the creation of a Job Support Scheme and the extension of the VAT cut to 5% for hospitality businesses until the end of March in a bid to protect jobs. But while the measures have been welcomed by the sector, many operators have warned they don’t go far enough. The Job Support Scheme will directly support the wages of people in work, giving businesses who face depressed winter demand the option of keeping employees in a job on shorter hours rather than making them redundant. The scheme will support viable jobs so employees must be working at least a third of their normal hours and be paid for that work, as normal, by their employer. The government, together with employers, will increase those people’s wages covering two thirds of the pay they have lost by reducing their working hours. The employee will keep their job. Anyone who was employed as of Wednesday, 23 September, is eligible. Running from November to April, all small and medium-sized businesses are eligible to apply. But larger businesses can only do so when their turnover has fallen. Businesses are eligible even if they have not previously used the furlough scheme. Employers retaining furloughed staff on shorter hours can claim both the Job Support Scheme and the Jobs Retention Bonus. Sunak said the furlough scheme would end because the support must “adapt and evolve”. He said no decision was harder but it is “fundamentally wrong” to keep people in unviable jobs. Bounce Back Loan repayment periods will be extended from six to ten years, with repayment holidays available. The government guarantee for the Coronavirus Business Interruption Loan Scheme will also be extended to ten years, giving lenders flexibility. Sunak also revealed there are plans for a successor loan programme that is set to begin in January. Tax bills that had been deferred to March 2021 will no longer need to be paid in full by the end of the financial year, but can now be spread across 11 smaller repayments. UKHospitality chief executive Kate Nicholls said: “The announcement of flexible employee support is a move in the right direction but hospitality needs more targeted efforts to support jobs. Almost one million people in our sector are still on furlough. We need government to go further in hospitality, recognising the greater restrictions imposed upon us, and pick up the full cost of unworked hours. This would be a relatively low cost for huge reward for our workforce. Full support to sustain people in their jobs during what could be a pretty bleak winter for hospitality would be a great step forward. Looking ahead, the extension of the VAT cut was absolutely critical. UKHospitality had pushed hard for it so it is great to see the government take note of our major concerns about recovery into 2021, though this must be extended further. The announcement of longer tax deferrals and the option of longer loan repayments should deliver some much-needed breathing room for employers. Things were looking grim for our sector yesterday (Wednesday, 23 September) and we were desperately hoping for some good news. The chancellor has given us some reason to be positive again but we urge him to engage with the trade on specific measures to keep people in work. While some of these measures announced today will give businesses a future to shoot for, and hope that they can begin to rebuild, we are still not out of the woods.” London Union founder Jonathan Downey tweeted: “Is that it? It that really it? Your colleagues in cabinet have just killed off thousands of businesses and a million jobs will now be lost because of this knee-jerk, no-basis, misguided, reckless curfew and that’s all you’ve got for us? It’s not enough. Like the coronavirus Job Retention Bonus and Eat Out To Help Out, this is another massive handout of taxpayer cash to big business/the chains. It’s useless for those businesses that can’t open and next to useless for SMEs and independents. Still nothing for the night-time economy. Abandoned.” Night Time Industries Association chief executive Michael Kill said: “We welcome the new Jobs Support Scheme, which we very much hope will stave off the feared cliff-edge of the Coronavirus Job Retention Scheme for many businesses. We are relieved [Sunak] has seen the plight facing businesses, employees and the self-employed across the UK and thrown a much-needed lifeline to hundreds of thousands of workers in the night-time economy alone, who were terrified of losing their livelihoods. However, we are seeking more clarity about what this announcement means for the majority of businesses in the night-time economy that do not know when, or if, they will be able to reopen their doors. These businesses cannot be allowed to collapse as the diversity and creativity of the UK’s night-time economy will die with them. We are also very concerned that the extension of business support loans will result in more painful debt for those already overburdened financially, many of whom are languishing in up to three quarters of commercial rent debt with no certainty on when this will be due. More support will be needed. The majority of our sector is still unable to even open and trade. Night-time economy businesses have been unfairly targeted by the new 10pm curfew, which we believe has no scientific basis and will prevent businesses from rebuilding the necessary revenue to stay afloat. The government must rethink this curfew and consider further sector-specific support for our industry if it wants to save Britain’s most-loved cultural institutions.”

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