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Budget 2021: CLA Cymru Responds

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2021 Budget: VAT cut and business rate extension – and we call upon the Welsh Government to ensure a safe and speedy opening for Welsh businesses

The Chancellor of Exchequer Rishi Sunak has today unveiled his Budget for 2021. Mr Sunak has announced that the 5% reduced VAT rate for the hospitality industry will be extended until September 30 followed by an interim rate of 12.5% for another six months. The standard rate will not return until April next year and according to the chancellor this makes for a £5bn cut in VAT.

Furthermore, the business rates holiday will be extended through to the end of June.

In response, Mark Bridgeman, President of the Country Land & Business Association which represents 28,000 rural businesses across England and Wales, said:

VAT cut extended for further six months

“The extension of the 5% VAT rate is a lifeline for many Welsh tourism and hospitality businesses who have faced crippling consequences of the Covid-19 pandemic. It will allow tens of thousands of businesses breathing space to begin their recovery in 2021, further boosted by hopes of a bumper summer season as lockdown restrictions are eased further.

“But the extension is a short term crisis response. Government should now begin thinking of how the UK’s tourism and hospitality sectors can thrive in the long term. If we are to compete with other major tourism destinations in Europe – all of whom have VAT rates far below 20% – the UK’s VAT rate should remain at 5% permanently. We estimate this move would add £4.5bn to the national economy, leading to more demand, more investment and more good jobs being created.”

Business rates extended until June

“The past 12 months has led to huge changes in the performance of many Welsh rural businesses especially in the leisure, hospitality and tourism sectors, with reduced turnover combined with extra costs of sanitisation. Therefore, an extension of the business rates holiday until the end of June is welcome news for the sector and is something CLA Cymru has been lobbying intensively for.”

The role of the Welsh Government

“Here in Wales we welcome additional support for some of the worst-hit sectors of the economy. But we call upon the Welsh Government to extend support to valid enterprises which may have slipped the support net, use its devolved powers to ensure all Welsh businesses can staff-up, stock-up and open-up as soon as it is safe. We look to the Welsh Government to continue supporting businesses here, and ensure that there is consistency between Wales and England to minimise confusion.”