Rishi Sunak sets out economy recovery plan
The chancellor must move beyond the government’s “blind-spot” concerning the impacts of international travel restrictions, ABTA has urged as the Rishi Sunak revealed his budget.
The Job Retention Scheme will be extended until the end of September, while the Self-Employment Income Support Scheme has been extended. The fourth grant will cover February to April, worth 80 per cent of average trading profits up to £7,500; a fifth grant will be available from July.
Meanwhile, corporation tax is set to rise from 19 per cent to 25 per cent from April 2023, but companies with profits of less than £50,000 will still pay 19 per cent.
However, leading figures in the travel industry said that the measure do not go far enough to support travel and tourism businesses.
Mark Tanzer, chief executive of ABTA, said: “We’re pleased to see the government has responded to many of our calls to extend furlough, business rates relief and VAT reductions. This will help to support jobs and businesses over the coming months. However, the chancellor must move beyond the government’s blind-spot concerning the impacts of international travel restrictions, and make support available to all travel companies whose business has been effectively closed by public health policy.
“The chancellor said there are extra grants for struggling businesses, yet many travel companies remain excluded from this critical support, despite not being able to generate income over the last 12 months. By focusing the grants on retail outlets, businesses including tour operators, online travel companies and home-based workers remain shut out of this much needed support. It is also worth remembering that with overseas travel still closed, in the short to medium term, the income retail travel agents can generate will still be limited. As such, it’s important they qualify for higher levels of support.
“We urge the government to reconsider this approach by making grants available to all travel businesses, not just those with retail premises, recognising that the reopening of overseas travel will come later than the other sectors and will likely to be gradual. The chancellor has said he will do all that is necessary to support struggling businesses and these words should be matched with action to support the whole travel sector.”
Julia Lo Bue-Said, CEO of Advantage Travel Partnership, said: “While the extension of the furlough scheme will be positive news for many sectors, travel businesses continue to be unable to take full advantage of the support package in its current form. Travel agencies do not make any money until their clients travel, but they still have to employ people to facilitate bookings and amend cancellations and refunds when required. Therefore, even while there is no money physically coming through the door, furlough simply doesn’t work for employers in this sector by the very nature of the business.
“The criteria that needs to be met by businesses to be entitled to the government grants means that 50 per cent of our members do not qualify because they work from home or an office and do not operate from a retail premises. Support with deferral of business rates and grants for all travel agents, regardless of their operating environment are what we need to help travel agents survive. There is an immediate pressure on these businesses because they have been unable to earn any income due to government imposed restrictions for 12 months now.
“While the plan to ease lockdown has initiated some positive signs of recovery in terms of enquiries and bookings, travel agents are in a state of financial limbo because the details of how and when we will travel is still fuelled with uncertainty and restrictions. We know testing is critical to the recovery of travel, and we need government to take a lead on bringing down the cost of testing so that a future holiday is still affordable for families. The media focus to date has been on leisure travel, however the government must not forget the lucrative business travel sector which will be intrinsic to the recovery of many other important sectors to the economy.”
Joss Croft, CEO, UKinbound said: “The extension of furlough is very welcome news for our industry, as is the business rates holiday and its further cut. We’re also pleased that leisure grants of up to £18k will be available for businesses that need to stay closed for longer, but we urgently need confirmation from government that tour operators, coach operators, language schools and event organisers will be eligible for these grants, having been unfairly excluded to date.
“It was however disappointing and a huge missed opportunity to hear that sector-specific support, which has been rolled out in Scotland, will not be provided. The VAT cut will be beneficial to hospitality and domestic tourism businesses, but its impact on inbound tourism, and the export value it delivers that will take longer to restart, will be minimal.
“The inbound tourism industry still has a long road to recovery and the government needs to recognise this. International inbound tourism to the UK can play a crucial role in supporting the country’s economic recovery, and it’s levelling-up and Global Britain agenda, but this will only be possible when it’s safe to travel again. Until then we need government to continue its dialogue with the industry and understand that further support is urgently required.”