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We support the Chancellor’s announcement in the Budget that the hospitality sector will continue to...
Conclusion
We support the Chancellor’s announcement in the Budget that the hospitality sector will continue to receive at least the same level of financial support. However, we remain concerned that those who supply them have not received the same level of financial support. Many of these suppliers are small businesses, who will be particularly vulnerable as the economy starts to re-open. Both hospitality providers, and many public sector organisations, are reliant on them. The Government’s support to hospitality businesses will be wasted if their supply chain collapses. We therefore recommend that the Government urgently assesses the impact of the closures to the hospitality sector on its suppliers, especially small businesses, and provides additional financial support to them during the period of reopening.
Paragraph Reference
50
Government Response
Not Addressed
Government Response
Not Addressed
HM Government
Not Addressed
Response: The closure of the hospitality sector has had a major impact on suppliers within the food supply chain. The Government has welcomed continued engagement and close collaboration with industry, and this has helped us to understand the implications. The Government will continue to use proven mechanisms to engage with industry and monitor risks and impacts as they develop. We acknowledge that small businesses face particular challenges. We conduct regular one-to-one discussions with food and drink Small and Medium Sized Enterprises (SMEs) to understand the issues affecting them. We also hold a monthly SME forum where attendees can raise concerns about issues affecting their business and where we can direct them to relevant Government guidance and support measures. This engagement allows us to monitor and seek to resolve the issues affecting SMEs, and helps to ensure their concerns are properly considered in development of Government policy. The Government has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by Covid-19. This applies across the economy, and those supplying food into the hospitality sector are eligible for many of the schemes. There are, and have been, numerous support options available for suppliers to the hospitality sector, especially small businesses. These include the Coronavirus Job Retention Scheme (extended to September 2021) and the Coronavirus Business Interruption Loan Scheme, which has now closed. The Recovery Loan Scheme is a further scheme in which the Government guarantees 80% on loans of £25,000-£10m for UK businesses, whose operations have been impacted by Covid-19, including those already in receipt of support. This scheme is open until 31 December 2021 and is available to businesses already in receipt of support. There is also support available through the Additional Restrictions Grant (ARG), and a further £425m has been made available to local authorities for discretionary funds. This can be used in financial years 2020/21 and 2021/22. The ARG supports businesses that are not covered by other grant schemes or where additional funding is needed. Local authorities determine which businesses to target and the amount of funding awarded from the ARG, and guidance specifically encourages the support of businesses that have been severely impacted by restrictions, including businesses which supply the retail, hospitality, and leisure sectors. In addition, the Trade Credit Reinsurance (TCR) Scheme has seen government reinsuring the credit insurance market since April 2020 in order to ensure businesses can continue to access insurance through the pandemic. This has provided stability and confidence to businesses across the UK, allowing supply chains to keep trading through offering over £210bn of insurance cover under the government scheme, helping to support an estimated £575bn of business turnover. Employers of all sizes can apply for funding from the Kickstart scheme which provides funding to create new job placements for 16 to 24-year olds on Universal Credit who are at risk of long-term unemployment. Employers can spread the start date of the job placements up until the end of December 2021. There is no minimum number of placements to be eligible. On 25 March 2021, the Government announced a new Business Rates relief fund of £1.5 billion, for businesses affected by Covid-19 outside the retail, hospitality, and leisure sectors; wholesalers and other suppliers will be eligible to apply. Although this will not be available until primary legislation is introduced, the Government will be working to ensure that businesses are able to apply as soon as possible. The Government is pleased to see that the phased reopening of the hospitality sector in April and May is having a positive impact on businesses supplying the hospitality sector. To support this, the reduced rate of VAT (cut from 20% to 5%) applied to most tourism and hospitality-related activities will continue until 30th September 2021; followed by a 12.5% rate until 31st March 2022.
Source
Report
Seventh Report - Covid-19 and the issues of security in food supply
07 Apr 2021
HC 1156
Timeline
Recommendation age
5.1 yrs
Report published
07 Apr 2021