In his summer statement, Chancellor Rishi Sunak unveiled a £30bn support package to protect jobs, save businesses, and cut carbon emissions following the coronavirus crisis. Tony McDonough reports

Chancellor Rishi Sunak has thrown a £4bn lifeline to the UK’s battered hospitality and tourism sector by slashing VAT and offering 50% discounts for diners.

In his summer statement to the House of Commons, Mr Sunak unveiled another package of support for the UK economy, worth £30bn, as he looks to kick-start the country’s recovery from the coronavirus crisis.

He offered a jobs retention bonus to ease the blow of the ending of the furlough scheme worth £9bn, a £2bn job creation and apprenticeships scheme for young people, a £3bn push to decarbonise homes and public buildings and a stamp duty cut for the housing market.

But it was the support for the hospitality sector that most caught the eye and it will offer some relief for Liverpool city region’s battered hospitality and tourism sector which, until COVID-19 hit, generated more than £5bn a year and supported more than 50,000 jobs.

On Tuesday night, the chief executive of Liverpool business lobby group Downtown in Business, Frank McKenna, had called on the Chancellor to “be bold” and cut VAT to zero for hospitality businesses.

Mr Sunak didn’t go quite that far but he did announce that VAT will be cut from the current rate of 20% to 5% for the next six months on food, accommodation and attractions, including cinemas and zoos. The cut lasts from Wednesday, July 8, until January 12, 2021.

He also unveiled what he called a first for the UK. Under the ‘eat out to help out’ scheme, meals eaten at any participating businesses, from Mondays to Wednesdays, will be 50% off up to a maximum discount of £10 per head for everyone, including children. 

Businesses will be able to register through a website launching on Monday. Firms can claim money back to have money in their bank accounts within five working days. Mr Sunak told the House: “1.8m people work in this industry and they need our support. With this measure we can all eat out to help out.

“This is a £4bn catalyst for the hospitality and tourism sector, benefiting over 150,000 businesses and consumers everywhere, all helping to protect 2.4m jobs. The final measure (eat out to help out) has never been tried in the UK before, We need to be creative.”

In March, the Chancellor created the jobs furlough scheme, subsiding the wages of millions of workers at a cost of more than £100bn. This comes to an end in October and he has now unveiled the jobs retention bonus to cushion the blow. Businesses will be paid £1,000 to retain furloughed staff. This would cost the Treasury more than £9bn if every job furloughed is protected.

Under the new Kickstart scheme the Government will pay the wages of new young employees for six months. There will be an initial £2bn to fund hundreds of thousands of jobs. There will be no cap on the number of places available.

Jobcentre work coach numbers will be doubled, the chancellor says and apprenticeships will be supported by bonuses for companies. Firms will get a payment of £2,000 for each apprentice they take on. Companies taking on apprentices aged over 25 will be given £1,500.

Under the green investment plan, the Government will provide £3bn for decarbonising housing and public buildings. This will include vouchers worth £5,000 and up to £10,000 for poorer families will be made available out of a £2bn pot to retrofit homes with insulation. A further £1bn will be offered to ‘green’ public buildings.

And the threshold for stamp duty will increase from £125,000 to £500,000. The cut will be temporary, running until March 31, 2021, and will take effect immediately.

Mr Sunak said the measure announced in the statement  “will give businesses the confidence to retain and hire. – to give people a better start. He adde: “Where problems emerge, we will confront them. Where support is justified, we will provide it, where challenges arise, we will overcome them. We entered this crisis unencumbered by dogma and we continue in this spirit with a simple desire to do what is right.”

Downtown’s Frank McKenna said the Chancellor’s statement offered a “timely boost” to businesses. He told LBN: “This was another positive response to business challenges from the Chancellor.

“I’d have liked to have seen a VAT cut to zero for the hospitality sector and I need to see the detail of the ‘eat out to help out’ initiative. However, the bonus payments for retaining furloughed staff, the Kick Start project for 19-24 year olds and the Stamp Duty change are very welcome.

“There will be some disappointment around not introducing a rent furlough scheme for the hospitality sector and I’m unconvinced about the £1bn investment into coaches and mentors via the DWP. Nonetheless, this latest set of measures are another indication that Sunak is on top of his brief, determined to do what he can to get the economy back on track.”