'VAT cut was more helpful than lockdown grants'

28-Jan-2021 - Last updated on 28-Sep-2021 at 07:55 GMT

The trade has implored the Government to extend a sector-wide VAT reduction following suggestions there are no plans afoot to continue the policy beyond March.

Treasury minister Jesse Norman told MPs that there were no current plans to extend the VAT cut from 20% to 5% beyond the end of March.

One operator told The Morning Advertiser (MA) the VAT reduction was more helpful for her two pubs than lockdown grants or the Eat Out to Help Out scheme.

Louise Robinson runs the Olde Cobbler in Northampton and the Olde Victoria near Kettering, both Northamptonshire, and hopes the Government will extend the cut for the latest period pubs have been closed.

“The VAT cut was a massive help when we were open last year, it helped us recoup the losses from when we weren't open," she said.

“To recover from this period, we really need some incentive to keep us engaged and to bother to open again, because at the moment money is just ebbing out of every corner really.”

Last hope

It has been speculated pubs will be the last sector allowed to reopen once again, with newspapers reporting May as a potential reopening time.

Robinson added: “[The reduction] was extended until the end of March, we haven't even traded for the vast majority of that time, so the least he can do is extend it for the period we have all been closed, to have some chance of having a benefit of it.”

"It's the easiest thing he [the Chancellor] can do to encourage the sector back on its feet.

“It was the last hope that we could at least make up for some of our losses, when we finally get to open.”

Managing director of Bath Pub Company, Joe Cussens, said the VAT cut represented “survival” for his number of pubs.

The reduction had given him “confidence to invest in my business and people,” and helped to secure jobs. Extending the measure would mean “a future for the company and our staff,” Cussens said.

Survival. And the confidence to invest in my business and people. Jobs secured - a future for the company and our staff
— Joe Cussens (@joecussens) January 27, 2021

Sacha Lord, night time economy adviser for Greater Manchester and operator said continuing support measures would be “crucial to the survival of the majority in the sector.”

Crucial to survival

“So I was shocked to hear this week that the VAT relief may be coming to an end,” Lord added.

If the Government failed to extend the VAT reduction, rates holiday and furlough scheme beyond April, many operators would be left in an “unmanageable” financial situation, Lord said.

“If the Chancellor does not extend the relief, along with the additional schemes, we could see a perfect storm of debt repayments, and whole subsections of our economy fail,” he added.

Treasury Minister Jesse Norman told MPs: "The temporary reduced rate of VAT was introduced to support the cash flow and the viability of over 150,000 businesses and to protect 2.4m jobs in the hospitality and tourism sectors.

"It was extended in September and extended again, and will now run until 31 March of this year. But the relief comes at a significant cost, and while the Government keep taxes under review, we have no current plans to extend it further."

Pubs could access other forms of Government financial support, he added.