Tourism businesses have been at the forefront of the catastrophic economic impact of Covid-19 and in many cases have seen income drop to zero within a matter of weeks. The situation continues to escalate further and immediate action is needed.
The announcement of the Job Retention Scheme (JRS) and the Self-Employment Support Scheme (SESS) along with the payments of £10K grants to businesses now being distributed has provided a life-line with the potential for thousands of jobs to be furloughed rather than laid off. However, additional measures are needed, specifically in regards to access to cash before the above schemes are up and running.
If the challenge of getting cash to businesses is not addressed as an immediate priority, tourism will lose many good tourism businesses and thousands of jobs before the end of this crisis.
As the voice for tourism in Northern Ireland, we are focusing on the above and lobbying for the below asks, which have been raised locally with the Ministers of Finance and Economy, as well as nationally through our UK Tourism Industry Emergency Response Group and the Tourism Industry Council, on which NITA sits.
Our current focus and asks from Government are:-
1) Support for Tourism
Businesses who do not pay Business Rates
There are still a lot of tourism businesses who are not able to access any of the grants that have been announced to date. These include those who rent premises or work from home and don’t pay business rates and are therefore not eligible for either the £10K or £25K grant.
The Welsh government have introduced a further package of support on top of the £1.4bn already announced (Rate relief and business grants), which specifically addresses those businesses which are not able to access existing support. This includes:-
£400M Emergency Funding – primarily aimed at businesses who do not qualify from existing support packages with grants of £10K (up to 9 employees) and grants of up to £100K (between 10 and 249 employees)
£100M Development Bank of Wales fund – provide loans of between £5K and £250K at favourable rates for companies experiencing cash flow problems.
A Similar support package that has been announced by the Welsh Government would enable those businesses who fall outside of existing support to get access to much needed cash.
2) Process for Payment of £25K
We appreciate the focus that has been given to the distribution of the £10K grants to small businesses who are eligible for the SBRR. We now need to see implementation of the process for the payment of the £25K grants.
Our Ask: A process for payment must be implemented immediately for the £25K grants. Will there be a process where businesses need to apply or will LPS contact those who are eligible?
3) Definition of Tourism for £25K grant
There are questions around the definition of tourism with regard to the £25K grant available to Retail, Tourism and Hospitality businesses. Coach operators would be particularly impacted. On 27th March, the Scottish Government announced that Coach Operators were to be included in the definition of Leisure/Tourism.
Our Ask: We would like to see the broadest definition of tourism put in place which should include sectors such as coach and tour operators.
4) Access to Cash through Banks
A major part of the interventions has been the additional liquidity and guarantees given to the banks. We have had some anecdotal feedback with regard to the behaviour of some banks. This has included - Significant increases in costs to extend facilities and up to 4 weeks to get an appointment to discuss individual cases. We welcome the reduced restrictions to the CBILS which means more businesses are able to apply for these loans.
- Ministers to monitor situation with banks to ensure businesses are getting access to funds
- Clarity from banks on the
information that businesses are required to provide in order to access the
CBILS or other loans
5) VAT Refunds
It has been a welcome intervention that VAT payments have been deferred, but for coach operators, they are zero-rated and have therefore VAT paid is not due to be refunded until May. In some circumstances this can be tens of thousands of pounds where investment has been made in new coaches. This would be of benefit to charitable organisations who are able to reclaim VAT.
Our Ask: We would like to see HMRC refund VAT as soon as the VAT is paid. This would make a big difference to cash flow.
6) The Job Retention Scheme
This has certainly provided a life-line to a number of Tourism businesses and has saved thousands of employees being laid off, however, there are still some outstanding issues with the Scheme. The ability to furlough staff has been very much welcomed by the Tourism Industry. With the majority of businesses closed there is no ability to generate income. These companies want to prepare for future business and therefore there is some work for employees particularly around planning, developing marketing campaigns, redesigning product/experiences. The interpretation of the guidance is that only volunteering or training is permitted for employees on furlough.
Our Ask: We would like to see flexibility regarding employee activities on behalf of the employer.
7) Self-Employed Support Scheme
This has provided much needed support to the large number of self-employed working in the Tourism Industry. On the whole is has been welcomed. There are some points for clarification but the requirement that more than 50% of your income must come from self-employment is causing concern, particularly with Tour Guides and Experience providers, due to the cyclical nature of Tourism.
Our Ask: That the 50% threshold is relaxed for those working in tourism and more guidance
is provided regarding the implementation of the scheme.
8) Rebuild and Regrowth
Tourism has shown its resilience in the past, but we need to have a resourced plan ready to be executed to regain our market share and build our businesses back up again once restrictions start to be lifted. This needs to be a collaboration between government and industry and will require a stimulus package such as:
- Investment in Insights to inform our recovery plan
- Marketing and Promotion of NI as destination
- Abolishment of APD
- Reduction in VAT on Tourism
As we receive more information or further guidance we will update this page.