Tourism and hospitality leaders welcomed the Chancellor’s cut in VAT and Job Retention Scheme Bonus for businesses announced today.

But they warned many businesses “are on the brink”, the impact of the measures would be “limited” and more support would be needed.

The Chancellor announced VAT on accommodation, attractions and eating out would be cut to 5% from next week until the new year, and promised a £1,000 bonus to businesses for every furloughed employee who returns to work and is retained to January.

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Kate Nicholls, chief executive of UKHospitality, said: “It’s reassuring the Chancellor singled out hospitality and tourism as a vital part of the UKs economy [and] good to see that government acknowledges our sector has been uniquely hit by this pandemic.

“This significant VAT cut, heightened ability to retain staff and incentives for consumers to eat out amount to a huge bonus.

“We hope the UK public sees it as sign that we are ready to welcome them back safely. The future of many businesses and jobs depends on it.”

Nicholls added: “The support measures to get workers off furlough and back into work will be greatly appreciated.

“Support to retain our workforce with a retention bonus, kickstart employment and bring on trainees and apprenticeships should also be a huge boost.”

But she said: “This doesn’t mean we’re out of the woods. There are significant challenges ahead.

“Businesses are facing huge rent debts with prospects for the future still in the balance. We’re going to need government support on this before too long.”

Joss Croft, chief executive of inbound tourism association UKinbound, also welcomed the Chancellor’s measures, but warned that many businesses “are on the brink”.

Croft said: “The chancellor’s economic recovery plan clearly recognises the value of hospitality and tourism, and cutting VAT from 20% to 5% and the Eat Out to Help Out scheme will deliver immediate positive impacts for businesses and consumers.

“The Job Retention Bonus Scheme will also help tourism and hospitality businesses, but only those that survive into next year.”

He warned: “These measures will not help the many businesses in inbound tourism who drive regional economies and jobs and are on the brink.

“Longer-term support will be required for these businesses, which have been hit even harder than domestic and outbound.”

Business Travel Association (BTA) chief executive Clive Wratten described any fillip to the corporate travel sector as “limited”.

Wratten said: “Today’s announcement gives a limited kick start to our industry. We welcome the support for returning employees to work and the VAT reduction for UK accommodation.”

Abta welcomed the chancellor’s announcement as “good news for domestic tourism”. But a spokesperson said: “The lack of backing for outbound tourism represents a missed opportunity, as this is a sector that directly provides 220,000 jobs right across the UK and is in urgent need of tailored support.

“We shall continue to press for additional support measures for the travel and tourism industry in the coming weeks.”

The TSSA union, which represents travel agents across the country, welcomed the chancellor’s announcement but said it left a “gaping hole” as it did not offer support for high street travel agencies.

General secretary Manuel Cortes said: “Sadly there is no clarity whatsoever on whether this support will be available for our high street travel shops.

“Jobs are on the line in our travel sector – which before the Covid crisis had been hit by the loss of both Thomas Cook and Flybe – due to a lack of government action. The chancellor must give more detail for the travel trade.”

But consumer group Which? used the situation to encourage customers to book direct. Travel editor Rory Boland said: “Booking direct means hotels and B&Bs don’t have to pay commission on the booking, meaning more of your money goes towards supporting local businesses.”

British Tourist Authority chairman Sir Patrick McLoughlin said: “The chancellor’s statement shows the continuing government commitment to the tourism sector and the millions of people employed within it.

“The package of measures including a major cut to VAT will help the industry as it starts to rebuild and to compete for international visitors while encouraging domestic visitors to get out and enjoy the summer.

“The key for success will be ensuring that we continue to attract domestic and international visitors through the autumn and extend the season.”

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