Removal of Job Retention Bonus 'leaves £2.1bn black hole' in sector finances

By James McAllister

- Last updated on GMT

UKHospitality warns removal of Job Retention Bonus leaves £2.1bn black hole in sector finances

Related tags ukhospitality Job Retention Scheme Coronavirus lockdown

UKHospitality has written to Rishi Sunak warning that additional financial support is vital to ensure hospitality businesses survive winter and are able to help power economic growth next year.

Ahead of the Chancellor’s Spending Review on Wednesday (25 November), the trade body says hospitality is set to lose the majority of its ‘golden quarter’ with Christmas sales severely depressed, as it then heads into the worst quarter for sales, from January through March.

It adds that the removal of the Job Retention Bonus (JRB) has materially damaged businesses’ ability to survive and will create a £2.1bn black hole in the sector’s finances in February.

The JRB, which would have entitled firms to a £1,000 payment for each furloughed staff retained until the end of January, was scrapped by Sunak earlier this month after he announced that the Job Retention Scheme (JRS) would be extended​ until the end of March 2021.

UKHospitality's letter follows the release of a new survey of hospitality businesses showing that, by February 2021 and without further Government support, around 600,000 jobs will be lost against employment figures from the same month this year.

The letter calls on the Government to announce a successor scheme to JRB as soon as possible, with an early drawdown facility; extend the business rates holiday for a further year from April; continue the VAT cut for hospitality and tourism for the duration of 2021; broker a workable solution on the huge rent debt hanging over the sector, supported by a moratorium extension; and maintain the VAT Retail Export Scheme.

UKHospitality argues that this package of additional financial support will put the sector in a position to rebuild next year and continue its position as a major contributor to economic and social wellbeing across all regions of the UK.

“The support received so far from Government remains greatly appreciated, including recent announcements on the extension of furlough for our teams and grants for closed businesses," says Kate Nicholls, UKHospitality chief executive.

"Yet these do not go far enough to protect businesses’ bottom line, and, in the case of the removal of the JRB, actively damage their ability to survive.

“The consequences of the withdrawal of the JRB are severe. While the sector has done its utmost to retain staff, almost half of businesses believe that they will now be forced to make redundancies because of this decision.

“More broadly, with the right package of support, the Chancellor can help the sector navigate the challenging landscape ahead, protect as many viable businesses and jobs as possible, and allow people to enjoy safe and welcoming hospitality across the country.”

It comes as Prime Minister Boris Johnson prepares to outline new tiered restrictions for England to Parliament this afternoon (23 November).

According to reports, pubs and restaurants will bear the brunt of the new measures​ so shops, cinemas and gyms can reopen.

It is understood that hospitality businesses in Tier 3 areas will now only be allowed to offer takeaways under the rules - which is all they are allowed to do in the current lockdown - while those in Tier 2 will only be able to serve alcohol with 'substantial meals'.

Nicholls has called the proposals 'absolutely devastating' for the sector.

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