To help restart the economy for UK hospitality and tourism, the Treasury has allocated a “£4 billion catalyst” which will see VAT on food, accommodation and attraction purchases reduced from 20% to 5% until 12 January 2021.
To generate consumer demand in restaurants, cafes and pubs, the government is also issuing an “Eat out to help out” discount for people nationwide.
From 3 - 31 August 2021, businesses registered for the scheme will be able to offer customers a 50% discount on food and soft drinks purchases up to a value of £10.
Kate Nicholls, chief executive of trade body UKHospitality, deemed the measures a huge bonus for the industry.
Speaking to HR magazine she said: "Perhaps most encouraging is the fact that our sector was specifically singled-out by the Chancellor. This shows he understands our importance and the scale of the damage this crisis has caused."
In a statement, she added: “Customer confidence is key to our sector’s revival and our ability to help Britain’s economic recovery. Applying every precaution to provide safe venues will count for nothing if customers are not coming through our doors.”
However, Nicholls also said that more government support would be needed in the future due to the looming “spectre of rent liabilities” faced by businesses that have been closed since March.
She commented: “Businesses are now facing huge rent debts with prospects for the future still in the balance.”
On a near-daily basis, businesses in the hospitality sector are announcing redundancies - a list that has seen the recent addition of Burger King which has had some stores open since 18 May.
“In all likelihood, hospitality businesses that were considering restructures pre-Budget are likely still having those conversations today,” Julian Cox, partner in the employment team at BLM, told HR magazine.
For HR teams still going through with redundancy plans he advised careful handling.
He said: ”Especially with furloughed employers who might now seek to make a case that keeping them on would benefit their employer to the tune of £1,000.
“Clear consultation with affected employees prior to a decision, a reasonable selection criteria and adhering to notice periods are key areas to evidence, in the case that an unfair dismissal claim is raised. Seek specialist advice where you can if needed. At a tough time, an employment tribunal is to be avoided at all costs.”
For construction and housing, the chancellor promised a £2 billion green jobs creation fund, which will focus on sustainability goals.
The funds will be used to allocate homeowners vouchers to make energy efficient improvements to their home. Government will also be releasing contracts to improve the efficiency of public buildings.
Though conceding that the incentives could prove helpful to the sector, Rob Oliver, chief executive of the Construction Equipment Association (CEA), said that its members don’t expect any significant return to business until the first half of 2021.
Oliver told HR magazine: “Of course, construction projects can’t be turned on like a light switch and the construction equipment community has genuine concerns about how soon their markets will recover. It’s unlikely that the £1,000 per person “gold star” for preserving furloughed workers’ jobs into 2021 will prevent more jobs being lost.”
Apprenticeships and traineeships at companies carrying out the promised building improvement work are incentivised as part of the kickstart scheme. However, the scheme has also been criticised for how it could overwhelm other areas of the talent pipeline.
Heather Powell, partner and head of property & construction and Blick Rothenberg said: “We need joined-up thinking here [...] Where is the funding for the colleges needed to provide the day release places for these employees? Do they have the capacity to take them on in September – an issue exacerbated if social distancing measures are still in place?”
Further guidance on the new aspects of the government coronavirus recovery plan are expected in the coming weeks.
