“Urgent” support is needed to prevent “widespread devastation”, the hospitality sector has warned Prime Minister Boris Johnson.
Around 120 hospitality and tourism bosses have signed an open letter calling for aid and investment.
The industry wants to see VAT reduced, tax bills further deferred and some rent debt covered through grants.
Bosses say parts of the sector will not survive because some businesses remain closed, despite the easing of lockdown.
“Hospitality businesses operate with very high fixed costs and labour costs are the only flexible point to absorb this suppressed demand,” the letter said.
“Many parts of the late night and leisure economy, as well as activities such as events and conferencing in our hotels, have no provisional date for reopening and this is impacting confidence and undermining job security.”
Labour is calling for the government to create a £1.7bn “fightback fund” to prevent firms in the hospitality industry and on High Streets from going under.
It wants ministers to give councils more flexibility to tailor support for their local economies and better focus funds on struggling businesses, such as hotels and cafes in coastal communities, as well as conference centres and music venues in towns and cities.
The Treasury said the government’s job retention scheme had protected 9.2 million jobs, adding that the Chancellor, Rishi Sunak, had announced a business rates holiday specifically for businesses in the retail, hospitality and leisure sectors.
Bosses claim that the hospitality and tourism industry have been hardest hit by the crisis, compared to other sectors. They also argue that the impact is likely to last longer than in other sectors, due to social distancing rules, restrictions on business events and lower demand from international tourists.
Recovery help needed
“Sales across the sector are expected to be 56% lower than last year, reducing revenues by £73.4bn and half of businesses do not expect to reach break even until the end of next year,” the hospitality industry warned.
Trade group UK Hospitality says it is “confident” that the industry can return to full strength and still be able to operate safely and responsibly, but it will require help from the government to enable businesses to “restart and begin to recover” over the remainder of 2020 and into 2021.
To that end, bosses have outlined a set of recommendations for the government, which include:
- Automatically extending the deferral of all tax liabilities that are due in July
- Providing a grant to cover a proportion of rent debt during closure, reopening and recovery
- Temporarily reducing VAT to 5% for tourism services
- Extending furlough for hospitality businesses to protect jobs
- Doubling the employer National Insurance contributions threshold to protect a return to part-time work
- Extending the hospitality business rates holiday to March 2022
The hospitality industry stressed in the letter that the sector has a record of creating new jobs following a crisis, and that it can be trusted to do it again, with help from the government.
“In the decade that followed the financial crisis hospitality consistently created around one in six new jobs thanks in part to the VAT cuts and investment in youth employment and training introduced in the immediate aftermath,” hospitality bosses wrote.
“We can do so again. Physical hospitality cannot be replicated digitally online, in the same way that some form of retail can be. We therefore urge you and your colleagues across government to work with us to stimulate demand and support the sector’s recovery.”