The hospitality industry is calling on the UK government to provide clarity and support for businesses such as hotels, restaurants and event venues in its autumn budget, which is due to be fully unveiled on Wednesday.

More than 200 CEOs representing hotels, entertainment venues, restaurants, cafes and other hospitality venues who are members of trade body UKHospitality have signed a letter urging Chancellor Rishi Sunak to make permanent a temporary reduction in VAT for the hospitality and tourism sectors.

During the pandemic, as lockdowns and travel restrictions placed pressure on event venues, hotels and restaurants, the government introduced a reduced 5 per cent rate of VAT for such venues until 30 September 2021, rising to 12.5 per cent on 1 October. Many businesses used the savings to retain staff or pay suppliers, or passed these on to customers.

The rate is currently due to go back up to the standard 20 per cent in April 2022, but UKHospitality is calling on Sunak to keep the lower 12.5 per cent rate on a permanent basis, saying the increase will ¡°set off an inflationary spiral which will undermine wage growth, hit demand and ultimately threaten jobs¡±.

Meanwhile, as UK media speculates about whether or not tougher restrictions on everyday life could come into play due to the country¡¯s ever-increasing rate of Covid-19 infections, the HBAA ¨C soon to be renamed beam ¨C has called on the Chancellor to include a plan to support business events, accommodation and meetings if measures to stop the spread of the virus are re-introduced.

The government¡¯s Plan B includes measures such as the return of social distancing guidance, mandatory mask wearing in public places, compulsory working from home and possible vaccine passports. Prime minister Boris Johnson has so far held off implementing Plan B, but many scientists and health officials have said introducing these measures now could prevent the country¡¯s National Health Service from becoming overwhelmed in a few weeks¡¯ time.

Simon Richards, treasurer of the HBAA, said: ¡°We know from bitter experience in early 2020 that the live events sector will immediately suffer substantial financial issues and jobs will come under threat as soon as there is a strong suggestion that we should work from home and that social distancing and compulsory mask wearing be reintroduced. Live events will quickly become commercially less viable and more likely to return to virtual as fewer delegates are allowed in the room and many choose not to travel to attend in person.

¡°It will not be a short-term hit; the industry will feel the consequences of this well into 2022 if event planners lose the confidence to commit to live events and to meetings taking place early next year. A knock-back like this would be a disaster for the hundreds of agencies, venues and service providers who are just starting to recover after struggling to survive over the last 18 months.¡±

The HBAA is asking Sunak to provide immediate support for any businesses impacted by the possible introduction of Plan B, including extending the lower rate of VAT beyond April 2022 and a temporary return of the government¡¯s furlough scheme to help the industry retain staff if business levels drop.