Business leaders call for rates relief or VAT cut to ease pain of Plan B restrictions

The British Chambers of Commerce have proposed a 5% VAT rate for hospitality and tourism

The BCC have expressed concerns over how “consumer-focused services firms, such as retail and hospitality” could be affected (Daniel LEAL /AFP via Getty Images)

Business leaders have called on Rishi Sunak to offer rates relief or to temporarily cut VAT to 5% to mitigate the “impending damage” to economic recovery caused by the partial return of Covid restrictions.

In an open letter to the chancellor, the British Chambers of Commerce says it is concerned about the financial effects of the ‘Plan B’ rules introduced this week that limit access to large events and will see millions of Britons working from home.

Retail and hospitality firms “are most exposed to the new measures because they come during the critical Christmas trading period when those firms rely on consumers’ willingness to interact and spend and is often vital to sustaining their cashflow ahead of typically quieter months”, the letter says.

“Those businesses in city centres which rely on the footfall from people working in offices will also be hit hard by the new measures.”

The BCC hasproposed a series of measures including “reverting the VAT for hospitality and tourism back to its emergency rate of 5%, reinstating 100% business rates relief for retail and making additional grant funding available.”

Shevaun Haviland said: “It is simply not good enough for the Government to say at this juncture that ‘enough support has been provided’ and leave it at that.

“These restrictions will have the greatest impact on some of the firms, like hospitality, events and retail, who have been hardest hit throughout this pandemic. They have strained every sinew to get to this point but now face being hamstrung during this crucial festive period through no fault of their own.”

The Federation of Small Businesses (FSB) also called for 100% business rates relief and said the Covid Statutory Sick Pay rebate should be reintroduced “allowing small firms to reclaim the support they provide to staff who need to isolate.”

A HM Treasury spokesperson said: “Our £400bn covid support package will continue to help businesses into spring next year and we will continue to respond proportionately to the changing path of the virus, as we have done since the start of the pandemic.”