Kate Nicholls: "Businesses are in a far less resilient place than during the first lockdown"

17-Nov-2020 - Last updated on 27-Apr-2021 at 13:06 GMT

UKHospitality chief executive Kate Nicholls has said it is 'imperative' the current lockdown in England is time limited so that as many businesses as possible can reopen in December.

Speaking to the Department for Business, Energy and Industrial Strategy Select Committee this morning (17 November), Nicholls said the sector needed stability and called on the Government to clarify as early as possible whether hospitality businesses in England would be able to reopen after 2 December when the lockdown is currently scheduled to end.

Describing the current state of the sector, Nicholls said hospitality businesses would go from a 'pretty precarious position' at the end of Q3 back into 'intensive care' in Q4 as a result of the impact to trade caused by the national lockdown, which came into force on 5 November and requires restaurants, pubs and bars to close with exceptions for takeaways and deliveries.

"Businesses are in a far less resilient place than they were in the first lockdown," she said.

"They have depleted cash reserves, and are currently burning through cash at a terrific rate. We estimate the sector is spending £500m in November just to remain closed."

Reflecting on the levels of trade since the first lockdown lifted in early July, Nicholls said that while hospitality businesses were able to reopen they never really came out of restrictions given the ongoing need for social distancing and limits on group sizes.

As a result, she said, restaurants and pubs never got above break-even levels of takings before national restrictions such as the rule of six and 10pm curfew came into force in September.

"At the end of 2019, hospitality was the third largest employer in the UK with a workforce of 3.2 million people and an annual turnover of £130bn," she said.

"We were forecast to grow 5% year-on-year and generate one-in-six net new jobs.

"But at the end of the third quarter of 2020, before the impact of the new lockdowns is taken into account, we had lost 660,000 jobs; turnover has fallen by 40% to just £80bn; and we had lost all of our foreign export earnings in terms of international tourism."

Starkly, Nicholls added that the sector's predicated 5% annual growth rate had fallen to -40%.

The coming months

Looking ahead, Nicholls explained that Q4 was usually the 'golden quarter' for hospitality businesses, with 40% of revenue earned between Halloween and New Year's Eve, and 20% of profits on average earned over the course of December.

"It is imperative [the lockdown] is time limited, and that we have the ability for as much of the sector to reopen in December with as few restrictions as are necessary to protect public health," she said.

"[Doing this will] allow these business to gain some income during December, and help the country socialise safely during what will be a challenging time period.

"It will also help us get into that position for growth and recovery once we past the first quarter of next year when the anticipated recovery starts.2

Nicholls' comments follow reports earlier today (17 November) that a stricter tier system could come into place across England once the lockdown is lifted.

Speaking on BBC Breakfast this morning, Robert Jenrick, Secretary of State for Housing, Communities and Local Government, said that the Government would be reviewing the tier system to enable to move the country back into a tiered structure once lockdown ends, and that any new structure would have 'greater consistency'.

His comments come after Susan Hopkins, medical director of Public Health England and chief medical adviser to NHS Test and Trace, said that ministers would have to look at strengthening the tier system, with the Tier 1 restrictions that covered half the country earlier this month having had 'very little effect'.

Regarding the tier system, Nicholls told the Select Committee that businesses in the sector needed to know 'as early as possible' which parts of the country would be in which tier.

She added that it would be 'really useful' for the Government to be transparent about the metrics used to make such decisions, and explain the end route for regions being able to move out of the higher tiered restrictions.