South West business leaders have given a cautious welcome to Chancellor Rishi Sunak’s £30billion package of emergency measures to boost the coronavirus-ravaged economy – but some feel the support doesn’t go far enough.
Businesses in the region stand to gain from several of the schemes announced in his economic update “mini-Budget”.
There has been support voiced for plans to retain jobs, by protecting furloughed workers, and help youngsters into employment, and for a stamp duty cut which could entice people to move to the region.
And there was particular interest in his green homes grant initiative, to make buildings energy efficient.
But what caught the eye most in the South West were Mr Sunak’s moves to help a beleaguered tourism and hospitality sector, only just emerging from three months of lockdown.
A six-month cut in VAT from 20% to 5% for this sector, and the “eat out to help out” half-priced meal deal during August, were all applauded.
And there was a feeling that although the Chancellor did not single out the South West, or even name it, he was showing awareness of its plight, which may bode well for the future.
But there was still a feeling that more will need to be done to ensure a long-lasting recovery for the region and the UK.
Tim Jones, chairman of the South West Business Council, gave “a cautious welcome for these initiatives”. He said they showed the Chancellor was aware of the approaching “cliff edge” of job losses, and welcomed the “kickstart” scheme to help young people find work, but stressed: “The support for young people is critical, but we need to remember a lot of our population is ageing but working. We can’t forget the over 50s, an area of vulnerability, particularly in rural communities.”
And he praised the VAT cut for tourism and hospitality but said it must become permanent, saying: “We have been asking for VAT cuts for 10 years, 5% is the rate operating in Europe, and this will allow the tourism industry to have a chance of getting back on its feet again.
“But we will lobby for it to be made permanent. We need our VAT in line with Europe.”
He said August’s cheap meals deal “seems good” but added: “The jury is out as to how effective it will be.”
He said it may help rebuild public trust that it is safe to visit restaurants again and said: “Our concern is confidence is at a low level and is going to be hard won.”
Stuart Elford, chief executive of Devon and Plymouth Chamber of Commerce, said: “Overall the Chancellor has provided some helpful stimuli to avoid youth unemployment and the temporary VAT cut on food, accommodation and attractions will be particularly welcome in the South West where we have such a reliance on the hospitality, leisure and tourism sectors.”
But he added: “The question is whether he has gone far enough to save businesses and jobs, many of which are already on the brink of collapse.
“While the job retention bonus for bringing staff out of furlough is helpful, it will not be enough for many businesses to keep people on and wider help will be needed to avoid many more redundancies. So while this is a good start, it is questionable as to whether the scale of stimulus will be enough.”
Kim Conchie, chief executive of Cornwall Chamber of Commerce, was upbeat about the message for hospitality businesses, from “the humblest beach cafe” up to Michael Caines’ establishments, that “there was something to give confidence that there is a way ahead”.
Mr Conchie said he was a “behavioural economist” and said: “I believe confidence is a huge thing.”
He said the meal vouchers scheme for August will encourage people back into restaurants and said: “I think there is pent-up demand.”
Mr Conchie said the cut in stamp duty may encourage more people to move to the West Country, welcomed the three point plan on jobs, particularly measures for to get young people into work, and the “green” homes initiative, which he said could be evidence the Chancellor sees environmental business, something the South West is leading on, as an important sector.
“These are the industries of the future, the renewable and marine sector,” he said. “So (the update) gave not only short-term comfort that jobs will be secure but, long-term, that there is a potential to level things up. It makes us feel, in the peninsula, that we have been recognised.”
Matt Griffith, Director of Policy at Business West, applauded “ an impressive array of measures ” but nevertheless added: “This economic statement, however, remains a gamble. Are firms confident enough to retain and create enough jobs in the face of such uncertainty? Will the measures be enough to counterbalance the hit to income and capacity that social distancing has given to our hospitality and food & drink industries? Will we see a second spike and local lockdowns to blow events off course?”
Mark Bridgeman, Country Land and Business Association (CLA) president, was delighted with the cut in VAT and said: “This welcome change from Government means more people will be able to afford to enjoy a holiday in the Great British countryside whilst also helping to revive rural economies across the country.
“The next challenge will be to ensure we are able to stimulate demand not just in the short term, but through the less popular winter months too”.
But others were not so happy, and wanted more. Nigel Costley, TUC regional secretary of the South West, said: ““The West Country needed to hear a bigger and better plan for new jobs with real prospects from the Chancellor – not just stop-gap work experience that finishes in six months.
“The best way out of this crisis and to avoid long-term economic downfall, is to create jobs through more new public investment in new homes, childcare, faster broadband, better transport and green tech”
He added “We’d hoped to hear of targeted support for the hardest-hit sectors like manufacturing and aviation. Struggling businesses will need more than a one-off job retention bonus to survive and save jobs in the long-term.”
And Luke Pollard, Labour MP for Plymouth Sutton and Devonport, and shadow environment secretary, said: “Any extra funding for the South West is welcome as we have an acute crisis in tourism and hospitality, major employers in the South West which need urgent attention.”
He said that while “elements” of what Mr Sunak had announced were positive the UK really needed a full budget focussing on protecting jobs and creating new ones in the green economy.
“We saw selected and token announcements which, on their own, sound good but do not add up to a comprehensive plan for a green recovery,” he said.
He said the Chancellor should have supported the tourism and hospitality sectors with a flexible furlough scheme after October and said: “They are facing three winters in a row effectively. With social distancing they will not be able to earn enough even with the reduction in VAT it may not be enough to keep those businesses afloat. We need a flexible furlough scheme.
“The economy will only be able to unlock and reopen when people have confidence to go to pubs and restaurants.”
He said that would only happen “when we have a functional track and trace system in the UK” and added: “Until the Government can restore trust we won’t be able to see the economy unlock.
Business Live’s Plymouth journalist is William Telford, business editor at Plymouth Live.
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Phone: 01752 293116
William has more than a decade’s experience reporting on the business scene in the Ocean City.
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“And we need our fair share of funding. We get so little from Government. We should not feel satisfied with the scraps from the table. We have to have our fair share.”
Steve Double, Tory MP for St Austell and Newquay, hailed the Chancellor’s announcement as great news for businesses.
“It goes further then any Government has gone before in supporting businesses, helping people back to work and encouraging people to spend,” he said.
“Particularly welcome for Cornwall is the temporary cutting VAT to 5% for the tourism and hospitality sectors, giving a much-needed boost to some of the industries hardest hit by coronavirus.”
“And the launching of a new ‘eat out to help out’ scheme – something that has never been done in this country ever before – giving people up to 50% off meals out, encouraging them back into restaurants, cafes and pubs, with businesses being able to quickly claim the difference back from the Government, again particularly welcome in Cornwall.”