Statement from Chief Executive Marc Croathall
“The extension of furlough until the end of September will be welcomed by businesses across the sector and relief will be felt by the many thousands of employees on furlough, given that Scotland’s tourism industry may not open fully until the summer months. However, furlough still comes at a cost to business and it will take some time for many businesses to start to trade viably again and meet the most basic costs. I’ve spoken to a number of sectoral associations over the past week who have told me that businesses simply don’t have the cash reserves to get them beyond Easter; it’s therefore crucial that a robust and tapered financial support package is delivered quickly to the businesses who need it the most in addition to the packages of support announced today.
The STA has campaigned relentlessly along with UKHospitality and other national tourism bodies for a long term reduction in VAT and today’s announcement that the reduced 5% rate of VAT will be extended until the end of September to 12.5% for a further 6 months is good news. The industry had hoped that the 5% rate would have been extended well into 2022 to allow businesses more time to recover and have the breathing space needed to meet the substantial costs of loan repayments and other significant costs which are looming on the horizon; we will continue to make the case for VAT not returning to 20% beyond March next year to stay competitive as a destination.
The announcement of new recovery loans with 80% guarantee replacing the CIBLS loan will also be of interest and welcomed by some in the sector, but it is the continued grant support that is needed by businesses to be able to off-set fixed costs and help finance the restart of business trading. I know from the conversations I have had with many different types of tourism businesses large and small across all sectors in Scotland, that it is this additional grant support that is needed with utmost urgency to help them restock and restart.
The STA will continue to work with Scottish Government with the aim of ensuring that this much needed grant support is allocated in time and in line with the Scottish Government reopening timetable. It remains the case that for many medium and larger tourism and hospitality businesses that the level of this grant support, whilst welcome will still not be sufficient to meet the monthly fixed costs. The need for continued tapered support and for the sector as a whole to be able to open and trade viably becomes all the more important.
Overall, it’s a supportive budget but it is absolutely vital that businesses who have been hardest hit and will be last to open are given a realistic and supportive timescale to enable sustainable recovery for the sector.”