Covid-19 support update AM 10 July 20

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A significant number of key announcements for the tourism industry over the last 7 plus days, however, I have avoided the temptation to alert you to them immediately, especially when the headline is so blindingly obvious to all but the application or implication behind them may not yet be.

Last week under the New Deal associated announcement there was a “kickstart for tourism”, £10m ERDF pot for small tourism business adaptation in England.  Grants of between £1k and £5k would be made available via LEP Growth Hubs.  The fund will be split between the 38 LEPs based on the number of eligible tourist businesses within their areas. For illustrative purpose, that’s c £260k per LEP if it was simply split equally and somewhere between a minimum of 2k and 10k maximum individual businesses grants available nationally, depending on the amounts awarded to each business.  Beyond the initial announcement there is still very little more of substance yet to say: .

As an ERDF package it reasonable to assume that, as with other recent ERDF based packages, the funding will adhere to existing ERDF priorities and “rules”.  It is far too early to assess who, how and to what degree it will assist, but nonetheless, it is still a very welcome additional opportunity from some small business in England.

Wednesday’s announcements on the temporary VAT reduction from 20% to 5% for “hospitality, holiday accommodation and attractions”, from next Wednesday 15 July 20 until 12 January 21 is again most welcome.  Many within the tourism industry have lobbied long and hard for a VAT reduction to help grow the industry and, far more recently, as covid-19 recovery measure. Its acceptance as the latter, applicable with one week of the announcement appear to have caught many VAT registered business off guard, both in terms of the application of the VAT reduction as a process and also as to how to handle the welcome benefit in terms of pricing. Do they pass some or all the benefit to the customer to drive more demand, or retain some or all of the benefit to help compensate for their own artificially reduced supply and/or structurally weakened demand?  Given the time frame these are largely matters for the individual businesses to address themselves, preferably in consultation with their professional financial advisers:

Given the longstanding campaign for reduced VAT on tourism it is to be hoped that the reduction proves it worth as a convid-19 support measure and is then retained beyond January 2021 as a recovery and subsequently beyond that as a future growth and development measure.  More lobbying require here I would suggest.

Also announce on Wednesday was Eat out to help scheme, a 50% discount up to a maximum of £10 per person on food and non-alcoholic drinks consumed on premises Monday to Wednesday during August. Businesses must apply to participate and if eligible and registered they will be reimbursed for the discounts applied within a matter of days of the claims being presented. There is comprehensive guidance on the scheme already available and my instinct is to refer businesses to that rather than to try summarising the detail and risking misinterpretation.  Again, initially at least a matter for individual businesses to assess, unlike the VAT reduction this is an optional opportunity, for those eligible to participate. 

Beyond some minor concerns about a potential, additional administrative burden  I have yet to hear any substantive reason why eligible hospitality businesses might wish not to participate. By now you will be aware that there has of course been some criticism from those food outlets that are not eligible and from those who feel alcoholic beverages should  have be included. I have insufficient information to start taking a view on the merits of the case being made and currently no intention of getting involved in the narrow window of opportunity left to us.   If any member destination isn’t content with that stance please let me know.  More importantly if you are made aware of any issues for potentially eligible businesses please let me know immediately.

A number of other new developments in England were announced late yesterday or may be on the cards to be announced soon.  Again, these are all over the popular media and I will hold off highlighting the detail until either there is something of substance to say about delivery, or simply to confirm that they are still works in progress and that you have not missed anything of importance since the headline announcements were made. I hope you remain content with this approach to updating the membership.


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