Budget 2021: Eddisons incorporating Barker Storey Matthews comments
Measures announced by the Chancellor of the Exchequer in the Budget Statement (03 March) regarding the extension of business rates relief, reduced VAT rates and the furlough scheme are welcome but remain too focused on the short term and the assumption of the smooth roll-out of the current roadmap out of business lockdown.
That’s the view of leisure and retail specialists of Eddisons incorporating Barker Storey Matthews in considering the effect the Budget Statement will have on operators in the sector.
The extension of full business rates relief will now run until the end of June (2021) and at two thirds of the normal charge for the remainder of the year. Yet, as it stands presently, all current lockdown legal restrictions will not be lifted until 21 June.
Many business operators in the retail and leisure sectors will be ‘testing the water’, as they are permitted, in the months running up until June. However, it will only be from mid-June when hospitality businesses can operate in anything like pre-pandemic circumstances in anticipating also that customers will return with confidence too.
The timeline for the maintenance of lower VAT rates is also too short for leisure operators against the backdrop of lockdown lifting and consumer confidence returning, according to Eddisons.
The current five per cent reduced VAT rate will operate only until the end of September this year (2021), lifting to 12.5 per cent until April 2022 when it will resume at 20 per cent – the pre-pandemic level.
Again, in following the current roadmap for the lifting of lockdown restrictions in England, this means that, in just over a year’s time (April 2022), businesses who have been closed for the best part of 12 months at this point (March 2021) will be expected to be operating at a level at which they can return to VAT outlay at the 2019 level.
The announcement in the Budget of the retention of the furlough scheme until the end of this September will help businesses to plan, in one respect, contrasting with the previous announcement of the scheme’s extension which was so close to the end-of-scheme deadline.
Commenting further on Eddisons’ response to measures affecting the retail and leisure sectors, Julian Welch, Director – who is based in the Eastern region – said, “The measures are welcome but could have been more meaningful were they extended to a more mid-term timescale.
“If there are no bumps in the roadmap and we have a spring and summer of something like ‘normal’ trading, that will only claw back some of a year’s severely restricted – or totally absent – trade.
“There may, indeed, be an initial consumer spend bounce in the late spring and early summer. But many consumers may take any window of opportunity open to travel abroad in the late summer and not spend in the UK.
“But, after that, consumers’ thoughts will, undoubtedly, be turning to September, the end of the furlough scheme and the consideration of their own household’s financial circumstances for what might lie ahead.
“As notable for the measures the Chancellor did address were those that were absent from the statement.
“The chance has been missed to address the glaring power imbalance between high street retailers and the online giants that existed before the pandemic.
“Lockdown has served to boost online operators pre-pandemic ascendance – and profits – at the expense of traditional high street operators who were forced to close.
“Much deeper fiscal easing for high street retailers and operators in the food and beverage sectors is required in order to ensure their survival and in recognition of their contribution to the viability of town and city centre economies.
“Similarly, the inequality of the business rates regime has been thrown in to sharp relief by the pandemic. This presents the authorities with the ideal opportunity to address this outdated regime – the reform of which business operators and sector professionals have long been calling on.”
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Richard Jones, Eddisons incorporating Barker Storey Matthews, 01733 897722, firstname.lastname@example.org.
April 7th, 2021