Diners visiting certain venues from Monday to Wednesday in any week of August will get up to £10 per person off their meal, chancellor Rishi Sunak announced in a mini-Budget statement yesterday (8 July).
He also said value added tax (VAT) will be cut from 20% to 5% on food and non-alcoholic drinks in restaurants, pubs and cafes from 15 July until 12 January 2021.
The announcement, which also included a new job retention scheme, was broadly welcomed by the trade, although concerns remain.
‘This significant VAT cut, heightened ability to retain staff and incentives for consumers to eat out together amount to a huge bonus,’ said Kate Nicholls, CEO of trade group UK Hospitality.
Around 1.5m hospitality workers in the UK remain furloughed, the group estimated, despite venues in England being allowed to reopen from 4 July.
Restaurants and analysts were still assessing the eligibility criteria of the voucher scheme on Thursday morning, but there was a bittersweet feeling in some parts of the trade after wine and other alcoholic drinks were not included in the chancellor’s VAT cut.
‘It is encouraging to see the chancellor recognising the exceptional economic hit the hospitality sector has taken since the country went into lockdown,’ said Miles Beale, CEO of the Wine & Spirit Trade Association.
‘We hope that their offer of vouchers for money off food and non-alcoholic drinks at pubs and restaurants helps the parts of the hospitality sector, that can open, to claw back some desperately needed funds.
‘However as so much of the income for these establishments comes from the sale of alcohol it is disappointing for the hospitality industry that alcohol isn’t included – and of course its suppliers are again left with little to cheer about.’
He said the UK’s wine and spirits sector was worth £50bn to the UK economic and called on the chancellor to rule out raising taxes on alcohol in the autumn Budget.
Duty tax on wine, beer and spirits was frozen in the previous Budget, in March 2020.
The cut to VAT may not necessarily lead to cheaper meals in restaurants, because the decision to pass on the cost will be taken by individual venues.
However, it may instead help venues to retain staff and to remain open for business.
Chef Adam Handling, owner of the Adam Handling restaurant group in London, told Decanter.com, ‘We think it’s a great way to help us manage cash flow for the opening months but we won’t be passing on the lower VAT rate in menu prices, as we need this support to help us through the reduction of covers, due to social distancing, in our restaurants and bars.’
UK Hospitality also said that rent debts were mounting for many venues. ‘We are going to need government support on this before too long,’ said CEO Nicholls.