The Chancellor is to cut VAT to 5% for hospitality businesses and introduce a new discount initiative for eating out to encourage customers to spend again.
Rishi Sunak is fast-becoming the hospitality industry’s hero of the coronavirus pandemic, as he today announced the changes to parliament in what he described as a £4bn catalyst that would protect over 2.4 million jobs.
From next Wednesday until January 12, VAT for hospitality businesses, including food, accommodation and attractions will be reduced from 20% to 5% for the next six months.
He will also give everyone in the country an ‘eat out to help out’ discount to help kick start the sector and get it moving again following the Covid-19 lockdown.
The first-of-its-kind scheme will see everyone given 50% off meals, up to £10 per head for adults and children, in participating restaurants from Monday to Wednesday during August.
Businesses will need to register through a website which opens next Monday and apply in the month of August, the chancellor said in his statement.
During his address, Sunak also said the government will pay a £1,000 bonus to businesses for each furloughed person brought back and employed to January 2021.
The ‘job retention bonus’ could cost as much as £9bn if every furloughed worker is covered, he said in his statement.
To qualify, when the furlough scheme officially ends in October, employees must be paid at least £520 each month from November to the end of January, the equivalent of the lower earnings limit in National Insurance.
Sunak also announced a £2bn ‘kickstart scheme’ to help create more jobs for people aged 16-24 and a pledge to provide 30,000 new apprenticeships for young people in England, giving firms £1,000 for each new work experience placement they offer.