Get together: stay apart

If you must play,
decide upon three things at the start:
the rules of the game,
the stakes,
and the quitting time.

“Eat out to help out”. It’s pretty catchy isn’t it? You’d like to think it was a lightbulb moment, rather than the result of a focus group or an all night Number 11 hack-athon (no, I’m not entirely sure what that is either). So, from today until January, anyone eating in a restaurant or cafe or spending money in the hospitality industry will pay less VAT, thanks to Chancellor Rishi Sunak’s decision to cut the rate to 15% in order to boost that sector of the economy and, hopefully, safeguard some businesses and jobs.

Which is nice. Of course, the construction industry is no stranger to the benefits of reducing the rate of VAT to 5% from 20% because it has benefitted so much from the very same thing: a 5% rate on home improvement products and works. Oh wait. Sorry. It hasn’t benefitted from that because, despite years of campaigning from organisations and groups across the industry to governments going back two decades, none of those governments have listened.

I’m not sure why it is that this government believes that there are real economic benefits to be gained from reducing the rate of VAT on a pie and pint as opposed to a new garage and some replacement roof tiles. Oh sure, the money that the Treasury would lose would be more, but then the money generated by a surge of home improvements would be so much more.

I was quite surprised at the cut, to be honest, as the Tories have always been so wedded to the idea of raising funds via VAT. It was, after all, a Labour Chancellor, Alastair Darling, who cut the rate from 17.5% to 15% for a whole year, from December 2008 in the wake of the financial crash. And it was a Tory Chancellor, George Osborne, who whacked it up to a more mathematically-pleasing, but purse-punishing 20% in 2011. But then Sunak is not the sort of Tory Chancellor we have seen for many years. Sajid Javid resigned as Chancellor as he was resisting the moves from Number 10 – the hand of Dominic Cummings on the tiller – to bring the two functions closer together. With Number 10 retaining the upper hand. Looking at the chummy pics that we see regularly of Sunak and Boris Johnson – the man who is, after all, his boss – it seems that this isn’t something that is bothering the younger man over much. Probably because he is playing the long game.

I don’t think there’s anyone out there, Sunak included, that doesn’t know, in their heart of hearts, that all this generosity is going to cost the country dear. It’s a gamble. Will throwing money at the economy, the job retention scheme, the VAT cut and half-price Monday to Wednesday vouchers for eating out, be enough to boost the recovery so much that the inevitable tax rises won’t need to be so painful because UK plc will be roaring ahead by then? Or will we be paying for this for a great many years to come?

We don’t know. We can only hope, wear our masks, wash our hands, spend our money where we can and keep our social distances when we come into contact with others as much as we can.

On that note, the fact that mass gatherings are still banned, and will be for a good while yet, I expect, brings me neatly to this Friday’s BMJ Industry Awards internet extravaganza. If we can’t get together in person to celebrate the very, very best of the merchanting industry and its supply chain, then here’s the next best thing. The ultimate in socially distanced celebrations: the online stream. Log on to at 3pm on Friday July 17th, load up Twitter and send your chat, congratulations and general bonhomie to the social wall – #bmjindustryawards – and celebrate the industry in lockdown style. Fluffy slippers are optional.


About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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