Mixed reaction from struggling Sunderland hospitality sector to Budget announcement

The already struggling hospitality sector has had a mixed reaction to the budget announcement from Rishi Sunak.

Wednesday, 3rd March 2021, 4:49 pm

The announcement was watched with a keen eye by the hospitality and arts sectors who’ve been brought to their knees by the pandemic and the subsequent social distancing restrictions.

A number of key areas should help the industry moving forward, however, including the announcement that the 5% reduced rate of VAT for hospitality will be extended for six months to September 30, with Mr Sunak telling MPs “Even then, we won’t go straight back to the 20% rate.”

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The hospitality industry responds to the Budget 2021 announcement

In addition, alcohol duty will be frozen for a further year.

A “new restart grant” will also be provided in April to help businesses reopen.

Mr Sunak told MPs: “Non-essential retail businesses will open first, so they’ll receive grants of up to £6,000 per premises.

“Hospitality and leisure businesses, including personal care and gyms, will open later, or be more impacted by restrictions when they do, so we’ll give them grants of up to £18,000.

Asiana in West Wear Street

“That’s £5 billion of new grants, on top of the £20 billion we’ve already provided.”

Mr Sunak also confirmed the furlough scheme will be extended until the end of September, and employees will continue to receive 80% of their salary for hours not worked.

Ian Wong of Asiana in West Wear Street says the Budget was mostly positive for hospitality.

"Overall, I feel it is a positive and less doom and gloom as expected of today’s budget,” he said. "The continuation of the reduced VAT is great, I only wish it would extend fully to April next year, allowing us to try and recuperate the massive losses.

Alcohol duty will be frozen for a further year

"The 5% until September gives less than five months, and that’s providing most venues will be allowed to open on May 17.”

He added: “The £18,000 grant for businesses with rateable value of over 51k will certainly help to re-stick the expired packaged goods that have been disposed of. I feel this should have been the approach from the beginning, however, but it’s still a relief that we are getting something."

Speaking about the furlough scheme, he said: “Furlough until September will give people the peace of mind, rather than ending in a cliff edge and I’m glad to be a part of a country that had the foresight to keep something in the war chest for such matters.”

Harry Collinson, who owns The Looking Glass in the city centre, as well as new business Cafe 1851 in Mackie’s Corner, also welcomed the news.

Harry Collinson has a number of city centre businesses, including Pandora in The Bridges

"It’s very welcome that the VAT reduction is continuing as business rates holiday will help, but it’s disappointing they didn’t give rates holiday for the full year though.”

He said the new restart grants were also a good idea, saying: “It’s really important that local authorities pay this out to all businesses who really need this to help them to survive, as regards paying rents etc.”

For the brewing industry, however, SIBA (the Society of Independent Brewers) have voiced their concerns.

Commenting on the Chancellor’s Budget 2021, James Calder, SIBA Chief Executive said: "Today, the Chancellor spent an extraordinary amount of taxpayers money to help keep the economy moving and jobs protected, pledging almost fifty-nine billion to policies including furlough extensions, continued business rates cuts, grants for hospitality of up to £9k and a series of investment initiatives."Whilst this is helpful to the broad hospitality sector, it does nothing for the nation's struggling independent breweries, who desperately needed direct tax cuts and targeted grant support to help them survive until the economy re-opens.

"What is the point in helping hospitality if there aren’t vibrant, diverse and local beers on offer when the economy re-opens?

"As a result of today’s announcements more Breweries are now more than likely than ever to close, just as there is light at the end of the tunnel.”

He added: "Breweries and wet led pubs will not benefit from the VAT cut extension as it does not apply to alcohol. Breweries will still be paying full business rates, VAT and duty and will not receive specific grant support - and whilst freezing beer duty is welcome, the Chancellor is still intending to increase the tax bill for at least 150 small breweries from next January with ruinous changes to small breweries’ relief, putting jobs and the recovery at risk.

"The recovery loan scheme which takes forward CBILS and Bounceback loans will benefit breweries and many will take advantage, but will continue to saddle them with debt, rather than direct grant support, inhibiting growth and investment in the sector for years to come.

"Restart grants of up to £18,000 per hospitality business will help businesses plan, but once again, it doesn’t look like breweries are automatically included within the definition, therefore are at the mercy of discretionary grants. Different local authorities may grant one business support, one not. One may do this in weeks, others in months.

"The ‘Super Deduction’ policy announcement, giving companies investing in qualifying new plant and machinery assets a 130% super-deduction capital allowance on their tax bills may be beneficial, but detail as to which taxes can be offset against is not yet published.

"Whilst this Budget will likely be celebrated by the broader hospitality sector, it comes as a disappointment to the nation's struggling small breweries and their supply chain, who have once again been de-prioritised by the Chancellor."

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