UK Chancellor Rishi Sunak’s latest economic support measures fall short of what is urgently needed to rescue Scotland’s tourism and hospitality industry from what Marc Crothall, Chief Executive of the Scottish Tourism Alliance has called a “perilous situation” and “nothing short of devastating” as fears mount that businesses will have no choice but to make mass job cuts when the furlough scheme ends.
The chancellor has said that a Jobs Support Scheme will replace the furlough scheme when it ends on 31 October and the government and firms will top up workers’ wages covering up to two-thirds of their hours for the next six months. Employees will have to work for at least a third of their normal hours to quality for the new scheme, which begins on 1 November.
Businesses that have borrowed money through the government’s loan scheme will also be given more time to repay the money and a VAT cut for hospitality will also be extended until March. The cut from 20% to 5% VAT that came into force on 15 July had been due to expire on 12 January next year.
Said Marc Crothall, “The Jobs Support Scheme will only help businesses which have sufficient demand to pay these minimum hours; the majority of tourism businesses simply will not be able to do so as their businesses are either closed due to legislation or restrictions.
“This continues to create pressure on the payroll at a time when consumer confidence and demand for the services which the tourism sector offers is at an all-time low, coupled with the increased restrictions in place. There is not enough work for people in our sector and employers cannot afford to pay staff when there is no work so we can still expect to see mass redundancies.
“The impact of the extension of the current rate of VAT at 5% until March 2021 will have a marginal effect on our industry, given that so many businesses will now be forced to make redundancies and close their doors for good. ”
“News of the loan repayment extension, Pay as you Grow, and the extended opportunity for businesses to continue to apply for loans as a last resort, with the knowledge of there being less pressure on repayment timelines will be welcomed by many but sadly, it just won’t go far enough to protect and save our industry from significant decline.”
Said Scottish Hospitality Group spokesperson Stephen Montgomery, “I think on initial look, the extension of the VAT at 5% is very much welcomed, however for wet led pubs, again, they do not benefit from this. As far as new job support scheme is concerned, we will wait and see how this will pan out when we see the true outline of it, and how it will or won’t benefit our members and their employees.
“We would still encourage Scottish and UK Governments to look at a financial package to support the business owners to protect them from facing the brink of business failures. Late night venues are still a cause for concern with no promising outlook for them. ”
Micheal Kill of the Night Time Industry Association has said that “shock, horror and despair” are reverberating across the UK’s night time industry in response to the chancellor’s announcement. He said, “It is now clear that there is no support for businesses in the sector which are still forced to remain closed due to COVID-19 restrictions. Even the businesses that can reopen in the industry are unable to see the benefit of the scheme as the recent 10pm curfew makes operating barely viable.
Nick Mackenzie, Greene King chief executive, said, “The industry is still dealing with the crippling aftereffects of the nationwide lockdown and the cumulative effect of the new restrictions, combined with the singling out of pubs, mean the measures announced by the Chancellor don’t go far enough, especially for drink-led city centre pubs. More targeted support is needed to help those people whose pubs remain closed, or businesses that were starting to recover which have again become unviable.”
Nearly 3 million workers – that’s 12% of the UK’s workforce – are on partial or full furlough leave, according to the Office for National Statistics.