Will economic measures announced in the July ‘mini-Budget’ help revitalise the hospitality industry?

8 July, 2020
by: Cripps Pemberton Greenish

On 8 July, Rishi Sunak announced a £30bn package of economic measures to support businesses as they manage the “profound economic challenges” facing them following the Covid-19 pandemic. 

As one of the country’s most impacted sectors, hospitality was targeted for special attention and the  Chancellor announced several schemes designed to revitalise the industry as it grapples with the practical and economic challenges of rebuilding post Covid-19.


Specific measures to support the hospitality sector

  1. VAT reduction

The Chancellor announced a reduction in VAT from 20% to 5% on food, accommodation and attractions until 12 January.  The cuts will apply to eat-in or hot takeaway food and non-alcoholic drinks from restaurants, cafes and pubs, accommodation in hotels, B&Bs, campsites and caravan sites, attractions like cinemas, theme parks and zoos. The move will lower the price of goods and services for the consumer, while reducing the amount of money that goes to the Treasury in a bid to get people spending.

  1. ‘Eat Out to Help Out’ scheme

The new ‘Eat Out to Help Out’ scheme has been designed to help encourage people back into  restaurants, cafes and pubs.  Households will be given discount vouchers to use when dining out on Mondays, Tuesdays and Wednesdays through August. Adults and children will be entitled to a 50% reduction (up to £10 per head), on sit down meals and non-alcoholic drinks. To take advantage of the scheme businesses will need to register through a website, which will open next Monday. More details of how the scheme will work in practice will be announced over the next few days.


What will the impact of the schemes be?

It is hoped that these creative measures, in addition to the government’s pledge to pay businesses £1,000 bonus for every furloughed employee they bring back to work, will protect many jobs and help hospitality businesses rebuild and make up for lost income over the last few months. The initial response from within the industry has been positive and the new schemes seen as a welcome boost at a difficult time.