"One of the hardest-hit sectors has been hospitality and tourism," announced Rishi Sunak in the Budget. He’s right. But in one fell swoop the chancellor demonstrated yet again the government’s total lack of understanding about the complexities of the UK travel industry.
One would have hoped Sunak included the UK travel industry in his definition of “tourism”. He certainly should have – ONS data last month showed turnover among travel and tourism businesses as a whole dipped to 26% of pre-pandemic (February) levels in May 2020.
Among these, the ONS noted that accommodation and travel agency businesses were hardest hit, with turnover falling to 9.3% of February levels in May and peaking at only just over 60% in August when some travel resumed.
And yet, whether the chancellor remains ignorant of the challenges facing the UK travel industry or just plain uninterested, travel has once again been left out in the cold.
Sunak acknowledged in today’s Budget that “150,000 [tourism and hospitality] businesses employing more than 2.4 million people need our support”. He followed with a range of measures to help these businesses, most notably with regards to VAT – the 5% reduced rate of VAT has been extended for six months, to be followed by a 12.5% interim rate before returning to the 20% rate in April 2022.
It’s a fantastic measure for hospitality and domestic tourism businesses that have been ravaged by this pandemic.