Chancellor Rishi Sunak has announced the UK budget for 2021, his umpteenth fiscal announcement since he took office in February last year. Measures include an extension of the furlough scheme and £18,000 in grants for businesses unable to reopen due to restrictions.
As some restrictions will remain in place at least until June 21st, the consequences of Covid-19 will drag out further still, and many businesses will rely on support measures to see them back through to profitability.
In his address to the House of Commons, the Chancellor said: "I said I would do whatever it takes, I have done and I will do."
Continuing to support British people and businesses is of upmost priority, he said, but the question of how to balance the nation's books will need to be addressed in due course too.
Expecting a faster economic recovery than previous forecasts, he said, this was only possible thanks to the measures put in place to protect jobs and livelihoods, and for this reason, he would continue to make them a priority.
Which measures in the budget will affect hospitality?
- The first measure to be extended is the furlough scheme, which will now last until September, with contributions from employers expected from July (10%, followed by 20% in August and September).
- Access to the self-employed scheme increased to include 600,000 more people as eligibility criteria have been updates.
- Business rates relief, which was waived for businesses in hospitality, leisure, and retail at the offset of the pandemic, will continue until June, after which it will be reduced to two thirds of original levels for the remainder of the year.
- The latest support mechanism rolled out as of today is a £5bn fund for high street pubs, restaurants and non-essential shops that have had to stay closed because of the lockdown, with grants of up to £6,000 per establishment to help non-essential retailers reopen safely. As for those who must remain closed until later in the year - hospitality businesses, hotels, gyms, as well as personal care and leisure firms - they will be eligible for up to £18,000 per site.
Paying for this, as well as extending public services and welfare spending, will likely cost us dearly in taxes in the coming years, as the government has borrowed more than £300 billion in the past year to support the economy - putting the UK's outstanding debt at £2.3bn.
Nothing in this life is free
Though the Chancellor said he had "to be honest about challenges facing the country" with the roll-out of tax increases in due course, former Prime Minister David Cameron warned against any corporation tax rises, comparing the current period to wartime.
Meanwhile former Chancellor Philip Hammond said that balancing the nation's finances should remain a priority, or else it would become harder to re-establish the government's relationship with citizens - despite the government's desire for short-term popularity.
So as to avoid debt "rising indefinitely," Rishi Sunak said in his speech, as "it would be irresponsible to let our debt rise unchecked," the government would use the “full measure of our fiscal firepower,” with incrementally increasing interest rates and corporation tax - only from the point at which the economy has recovered, aiming to reach 25% by 2023.
National Insurance, VAT and income tax will not be affected yet, with the latter guaranteed to remain at the same level until 2026.
Reactions
While some of the support measures - namely, the extension of the furlough scheme and the introduction of additional grants - received praise from within the hospitality industry, for others, measures continue to fall short of meeting the sector's needs.
