Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the impact on businesses of the concurrent ending of the reduced rate of VAT, business rates support and rent protections.

The Government has provided around £400 billion of direct support for the economy since the start of the pandemic, which has helped to safeguard jobs, businesses, and public services in every region and nation of the UK. This includes the £1 billion Omicron package announced in December 2021, which was focused on supporting the hospitality, leisure, and cultural sectors.

Now that we have returned to Plan A, and as individuals and businesses learn to live with Covid-19, it is right that this exceptional support comes to an end as planned. This is vital for a strong economy and to help rebuild the public finances. However, support is being withdrawn gradually, so that businesses can plan and adjust over time. For example, the rate of VAT for hospitality and tourism businesses was increased gradually to its current level of 12.5 per cent in October 2021 before reverting to its pre-pandemic level of 20 per cent as planned in March 2022.

The Government is aware that the high street faces long-term challenges and is committed to supporting the businesses that make our high streets and town centres successful. While the Government has provided unprecedented business rates support worth £16 billion to businesses in the retail, hospitality, and leisure sectors throughout the pandemic, it is right that we move back towards pre-pandemic levels of support now that restrictions have ended.

At Autumn Budget 2021, the Government announced a new temporary business rates relief set at 50 per cent up to a maximum of £110,000 per business for the retail, hospitality, and leisure sectors worth almost £1.7 billion in 2022-23. This will support the businesses that make our high streets and town centres successful to evolve and adapt to changing consumer demands until the next revaluation.

The multiplier will be frozen in 2022-23, a tax cut worth £4.6 billion over the next 5 years. This will support all ratepayers, large and small, meaning bills are 3 per cent lower than without the freeze.

On the topic of rent protections, following mandated closures during the Covid-19 pandemic, the Government introduced an eviction moratorium and related protection measures to protect businesses from eviction and insolvency. As a result, some businesses have accrued rental debts, estimated at a total of £1.5 billion as of March 2022, creating the risk of insolvencies and job losses, should these debts not be resolved through sustainable repayment plans. Many landlords and tenants have come to voluntary agreements on this rental debt. Where these agreements have not been reached, the Government is passing legislation this Spring to support the orderly resolution of these debts, including a set of principles for negotiation and a binding-arbitration backstop. This builds on a Code of Practice for commercial property relationships published by Government in November 2021, and sets out a clear path for both landlords and tenants to move from dispute to resolution.