Diners will get a 50% discount off their restaurant bill during August under government plans to bolster the embattled hospitality sector.

Chancellor Rishi Sunak unveiled the "eat out to help out" discount as part of a series of measures to restart the economy amid the coronavirus pandemic.

The deal means people can get up to £10 off per head if they eat out between Monday and Wednesday.

Mr Sunak also said VAT on hospitality and tourism would drop to 5%.

The reduction, from 20%, will be in place for the next six months.

As he announced the discount, the chancellor said the UK was facing a "unique moment" because of Covid-19, adding: "We need to be creative."

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Pubs and restaurants reopened on Saturday after more than three months in lockdown, with safety measures in place to prevent the spread of the coronavirus.

Mr Sunak sought to reassure the public that it was safe to dine out. "I know people are cautious about going out. But we wouldn't have lifted the restrictions if we didn't think we could do so, safely," he said.

The discount will not apply to alcohol, but to food and soft drinks up to £10 per person.

The Treasury said the 50% discount can be used unlimited times during August and applies to participating restaurants, cafés, and pubs across the UK.

Mr Sunak said the plan was aimed at getting "customers back into restaurants, cafes and pubs" and protecting "the 1.8 million people who work in them".

Businesses that want to take part in the scheme will have to register through a website that opens on Monday 13 July.

Mr Sunak said: "Each week in August, businesses can then claim the money back, with the funds in their bank account within five working days."

He added that the cut in VAT, from 20% to 5%, would apply to "eat-in or hot takeaway food from restaurants, cafes Chancellor gives diners 50% off on eating out and pubs; accommodation in hotels, B&Bs, campsites and caravan sites [and] attractions like cinemas, theme parks and zoos".

The lower tax rate will be implemented next Wednesday, 15 July, and will remain in place until 12 January 2021.

Caroline Roylance, owner of The George pub at Fordingbridge, Hampshire, said she would be applying for the "eat out to help out" scheme.

The pub reopened on Wednesday after being closed since 23 March, when the coronavirus lockdown was implemented.

She said the discount and the VAT cut "will help us make it through the next few months, because trade is unlikely to return to pre-Covid levels for some time".

"Saying that, it's been surprisingly busy today, which is encouraging, but it's still not July busy," said Mrs Roylance. "It's a start though."

'Challenges ahead'

UK Hospitality, the trade body which represents the industry, "warmly" welcomed the moves, as well as Mr Sunak's plans to stem unemployment through schemes such as creating thousands of job placements for young people.

However, UK Hospitality's chief executive, Kate Nicholls, said: "This doesn't mean we are out of the woods and there are still significant challenges ahead.

"The biggest of these is the spectre of rent liabilities, which many businesses are still facing from their closure period. We are going to need government support on this before too long."

Meanwhile, the exclusion of alcohol from the "eat out to help out" discount hit some pub groups' share prices.

Mitchells & Butler's share price jumped by 7.3% to 175p towards the end of Mr Sunak's statement, when he revealed the VAT cut for the hospitality and leisure industries, as well as the dining out discount.

But once it became clear it did not include alcohol, Mitchell & Butler's share price fell "just as quickly as it spiked up", said Michael Hewson, chief market analyst at CMC Markets UK.

Marston's share price also dropped 6.1% to 48.98p. JD Wetherspoon's share price fell 2% to 986p.

BBC