Hotels, bars, restaurants and cafes will see a temporary cut in their VAT from 20% to 5% as the Chancellor’s Summer Statement gave a boost to the sector hardest hit by coronavirus.
And in a further move to encourage people to go out, Chancellor of the Exchequer Rishi Sunak announced Eat Out to Help Out, a voucher scheme in which diners will have 50% off meals including non-alcoholic drinks up to a maximum of £10 per head during August.
He also confirmed a much-signposted stamp duty holiday which raises the threshold for payment of stamp duty on house purchases from £125,000 to £500,000.
That will be good news for the Northern Ireland housing market though first-time buyers are currently exempt from stamp duty on homes costing up to £300,000.
In addition, many first-time buyer homes in Northern Ireland are below the existing threshold of £125,000.
But the Chancellor warned that the Coronavirus Job Retention Scheme - introduced as an emergency measure when the pandemic struck in March - would have to be tapered off between now and October as previously announced.
He said that while his critics would call for an extension beyond October, maintaining the scheme gave people “false hope” that their jobs will still be intact afterwards.
“Furlough will wind down flexibly and gradually.”
But he announced that employers will be given a bonus of £1,000 for every employee that the bring back from furlough, if the employee is employed every month from November to January and paid at least £520 every month until January.
He also announced a ‘kick-start’ scheme which will reward companies with a £5,000 bonus where they give new jobs to young people, with the government covering the new start’s salary at minimum-wage level for six months.
But the scheme does not automatically apply in Northern Ireland.
He also announced a voucher scheme to fund work on homes to make them more energy-efficient.
Roger Pollen, head of external affairs at the Federation of Small Businesses in Northern Ireland, welcomed many of the measures. “The six months VAT cut on food, accommodation and attractions from 20% to 5% will give a much-needed boost to those sectors that have been hardest hit by the Covid-19 crisis, while the ‘Eat-out to Help out’ discount vouchers will help drive footfall to hospitality businesses.
“The £1,000 Job Retention Bonus for employers will also encourage businesses to bring back furloughed workers and could help avoid redundancies.
“However, many of the other measures announced today apply to either England or Great Britain only, and it is up to the Northern Ireland Executive to decide how best to utilise the funding which emanates from Barnett Consequentials to achieve the same sort of economic benefits here.”