The Budget 2021 – Highlights for hospitality, retail, leisure and us.
This was the most important budget in many of our lifetimes, as the UK combats the hardest economic downturn on record. Millions of eyes were on the Chancellor, Rishi Sunak, as he delivered his speech.
There were many items that I was interested in, some which would affect our customers in hospitality, retail and leisure and some which would affect Foursquare more directly.
Firsty, the extension of the furlough scheme until the end of Sep is very welcome. The vast majority of businesses I speak to on a daily basis are all making use of the scheme so the reassurance that the aid will remain for a few months after the high street reopens is comforting. It will mean that businesses, including ourselves, can make more flexible decisions on staffing costs which is a big help.
Next the announcement that VAT for the hospitality trade will remain at 5% until Sep is also welcome. For some of the businesses I have spoken to, the VAT reduction is literally the difference between breaking even and not. There was also an announcement that a new 12.5% rate would be introduced for that sector from Sep for a further six months which is a useful step.
Unfortunately for wet-led businesses, the VAT cut has not been extended to alcoholic sales which means that the recovery is more difficult for those businesses than food based businesses.
The current business rates exemption will be extended until the end of June. After that they will be discounted to one third of the normal charge for the rest of the financial year, up to a maximum of £2m for closed businesses.
There is a new grant being made available to businesses who have been forced to close. Titled ‘Restart Grants’, non-essential retail will receive up to £6k per site, hospitality and leisure businesses will receive up to £18k because they will remain closed for longer.
There is also a new loan being made available on top of BBL and CBIL loans. The loans will be 80% guaranteed by Government in the same way that they previous two have been, and are available to businesses who took the previous two. This is welcome, the original loans were designed to provide funding for a 6-9 month crisis and the money received by most was spent long ago. Further details are yet to be announced about the loans but I’m hopeful that the application process and the criteria won’t be a hurdle for the businesses who need it most.
All in all, the announcements were encouraging for our friends in hospitality, retail and leisure. If the promising projections of a swift economic bounce back come true, then the medium to long term future of many businesses is brighter than expected. Of course we are not out of the woods yet and there are several months of hardship and uncertainty left to fight through but overall the mood is more positive from those I have spoken with.
On a more disappointing note, I was hopeful for more support for our colleagues and peers who are self-employed. There was a renewed ‘Self-Employed Income Support Scheme’ announced however it does little to address the gap in support for the millions of freelancers who have so far been excluded from much of the financial help. A significant proportion of Foursquare Group suppliers are captured within this forgotten group and I have heard first hand how much suffering they are going through. Creative people who have taken a risk to better their lives and contribute independently to the economy have been forgotten or purposely excluded and it is unfortunately causing a great deal of financial stress and mental health issues among those involves. I back the amazing lobbying work being carried out by groups such as ExcludedUk and ForgottenLtd.
Of course there has been plenty of support and public spending in area areas over the last year and this will have to be repaid by somebody. To do this it was announced that corporation tax will be increased in April 2023 to 25% on profits over £250,000.
The rate for small profits under £50,000 will remain at 19% and there will be relief for businesses with profits under £250,000 so that they pay less than the main rate.
This isn’t a shock. The money has to be repaid and a corporation tax rise always seemed the most sensible way to do it. I am actually surprised that the tax rise has been deferred until 2023. I expected the the rise to take effect sooner.
It’s right, to me, that smaller businesses and less profitable businesses are protected from the higher tax rates. This will be a huge help to the independent business community that we serve and provide a welcome bullet in the fight against the chains.
This opinion article does not necessarily represent the views of Foursquare Group as an organisation.
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