Representatives of some of Scotland's hardest hit industries have said longer-term support will be need to save businesses and jobs.

The Scottish Licensed Trade Association and the Scottish Tourism Alliance welcomed the decision by UK Chancellor Rishi Sunak to extend the current furlough arrangement until the end of September but warned that the increased employee contributions required by employers from July will cause severe difficulties for many businesses.

The SLTA said the increased costs would add to the “already overburdened” financial hardship facing pubs and other hospitality businesses. The trade association also said it had hoped the furlough scheme would be further extended well into 2022.

Confirmation that the VAT rate for hospitality firms is to be maintained at a reduced 5% rate until September was “excellent news”, the SLTA said. However, with this then increasing to 12.5% for another six months then returning to 20% in April 2022, it was a “temporary fix”.

Paul Waterson, SLTA spokesman, said: “It’s a game of two halves for the licensed trade and hospitality industry – good news in the short term but not such a sunny longer-term outlook although it does buy us a bit of time. The fortunes of our sector in Scotland will also depend on how our road map out of lockdown looks.

“The furlough extension is, of course, to be welcomed but the costs incurred after employers are asked to contribute 10% in July then 20% in August and September may be prohibitive for some at a time when many are struggling to survive and waiting to see when hospitality can start to open up north of the Border.”

READ MORE: SNP: Rishi Sunak's UK Budget marks 'a return to Tory austerity cuts'

Mr Waterson added: “Looking at our longer-term prospects, we will be at a disadvantage when the sector does open up and people start travelling to Scotland – we’ll be competing against other countries where the VAT rate for hospitality is lower. As we try to rebuild our industry, we really need VAT to remain at 5% permanently if we are to attract tourists.

“It’s absolutely vital that policymakers take a long-term view and we urge the Scottish Government to look closely at today’s announcements on rates and grants and give further consideration of long-term support if Scotland is to lag behind England in the reopening of the hospitality industry.”

Other measures announced today and welcomed by the SLTA included a freeze on alcohol and fuel duty. However, while welcoming that changes to Corporation Tax won’t come into effect until 2023, the SLTA expressed concern that the increase looked likely to “increase substantially”.

HeraldScotland: Marc Crothall: Furlough still comes at a cost to business Marc Crothall: Furlough still comes at a cost to business

Marc Crothall, chief executive of the Scottish Tourism Alliance, said: “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 six 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."

"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.”

HeraldScotland: Liz Cameron: The Chancellor must keep the door open to providing more support.Liz Cameron: The Chancellor must keep the door open to providing more support.

Liz Cameron, director and chief executive of the Scottish Chambers of Commerce, said: "This Budget was always going to be a difficult balance for the Chancellor, given we are still in the midst of a major economic and health crisis.

"There is good news on several fronts which will help businesses in Scotland plan with a level of confidence. In particular, the extension of the furlough scheme is a major boost which will help businesses retain as many jobs as possible and support thousands of employees across Scotland and indeed the UK.

"The extension of VAT reduction for the hardest hit sectors and investment incentives respond directly to our calls and will provide much-needed support to Scottish businesses.

"Reassurance has been provided today. But the Chancellor must keep the door open to providing more support if the pandemic hits our economic re-opening plans again."

HeraldScotland: Rishi Sunak: Scotland to receive £1.2 billion in additional funding.Rishi Sunak: Scotland to receive £1.2 billion in additional funding.

Ian McConnell on Rishi Sunak's Budget: The good and the bad

Rishi Sunak’s decision to raise corporation tax to 25% from 2023 looks like a sensible move, given this will still be very competitive in a global context but will yield crucial revenue.

READ MORE: Major reliefs have been put in for smaller companies, and the corporation tax changes also include significant measures to boost investment.

£1.2 billion Budget boost

Scotland will receive a £1.2 billion boost as a result of the UK Budget, Chancellor Rishi Sunak has said. 

READ MORE: He said millions of families and businesses across Scotland will continue to be supported by the UK Government through a Budget that "meets the moment".

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