Hospitality pleads for further financial support following 'Freedom Day' delay

By James McAllister

- Last updated on GMT

Hospitality pleads for further financial support business rates holiday extension furlough VAT cut 'Freedom Day' delay

Related tags Government Business rate relief Furlough Vat cut ukhospitality Night-time economy Bbpa Coronavirus lockdown Freedom Day

Chancellor Rishi Sunak is facing urgent calls from the hospitality sector to extend 'crucial' financial support measures following confirmation of a four week delay to England's final lockdown easing.

Last night (14 June), Prime Minister Boris Johnson announced that the plan to drop all legal restrictions on social contact in England will no longer go ahead​ ​on 21 June as hoped, and will instead be pushed back to Monday 19 July.

It means pubs and restaurants will have to continue following social distancing restrictions and operate table service only for at least another four weeks.

Limits on weddings and wakes will be lifted providing with social distancing is adhered to, while event pilots will continue for the Euro football tournament and theatrical performances.

With businesses already facing the prospect of increased costs from the beginning of next month, the delay has led to pleas from hospitality trade bodies for further financial relief to be made available to keep firms from going under.

From 1 July, the business rates holiday for hospitality is due to fall from 100% to 66%, with employers also expected to begin making contributions to furlough on the same date as part of a 'tapered' withdrawal of the Job Retention Scheme (JRS).

Despite rumours of the delay circulating since the weekend, the Chancellor has so far resisted all calls to extend support measures.

UKHospitality has warned that having to operate under restrictions for an additional four weeks will cost the sector around £3bn in sales, and put approximately 300,000 jobs at risk.

“The decision to delay is hugely disappointing, but the Government has judged the evidence and acted as it sees fit. It does, however, jeopardise the return on investment that the Government has afforded hospitality and it’s crucial that further support is announced to push us over the line," says Kate Nicholls, chief executive of UKHospitality. 

“The hospitality sector has already lost more than £87bn in sales in the pandemic leaving businesses deeply in debt and at risk of suffering 'economic long Covid' without further support.

"Our businesses face incredible levels of debt and will now face a huge cost hike, with business rates payments set to recommence and rent accruals due at the end of the month.

"A swift indication that the business rates holiday will be extended would go a long way to bringing succour to a battered sector - paying any amount of tax while still unable to trade viably would save businesses and, in turn, tax receipts in longer term."

A 'devastating blow' to the night-time economy

News of the delay has come as a 'devastating blow' to the beleaguered night-time economy, much of which has been forced to remain shut since the start of the pandemic. 

"In a very real sense, the Prime Minister has ‘switched the lights off’ for an entire sector," says Michael Kill, CEO of the Night Time Industries Association, which represents 1,200 independent bars, clubs and live music venues across the UK. 

"Many businesses have not survived this pandemic and others are on a financial cliff-edge, unable to operate viably. Hundreds of thousands of jobs have already been lost, a huge pool of creative talent has been swept away, and we have been left to suffer extreme financial hardship. 

“This delay will drive confidence in the sector to a new low, culminating in more of our workforce being forced to leave the industry, and customers, who have been starved of social engagement, attending illegal unregulated events in place of businesses that are well-operated, licensed and regulated.”

A recent flash survey of 300 night-time economy businesses, carried out by the NTIA, found that one in four will not survive longer than one month without further Government support, and 50% no longer than two months.

More than half (54%) of businesses said they had spent over £15K in preparation for reopening on 21 June, and 17.8% spent over £40K.

Meanwhile, a third (33%) of businesses estimate they will lose over 30% of their workforce due to the delay in the easing of lockdown.

“These businesses are overburdened with debt and so any decision to delay the full reopening of our sector must be paired with a robust financial support package," continues Kill.

"[This should include] additional restriction grants; exclusion from furlough contributions; extension of loan repayment holiday for Business Interruption and Bounce Back loans; as well as business rates and VAT relief for the next 12 months."

Concerns also surround the estimated £2.6bn commercial rent debt that remains unresolved across the sector, with the NTIA also calling for a further extension to the lease forfeiture moratorium, which prevents landlords from repossessing commercial premises if businesses are unable to pay their rent as a result of the Coronavirus pandemic, beyond the end of June.

Fears of a 'lost summer' for pubs

The British Beer & Pub Association (BBPA) says the delay in the roadmap for full reopening will cost pubs £400m, and it now has 'real fears' of a lost summer for pubs, as confidence deteriorates and bookings are cancelled due to current restrictions staying in place.

“Delaying the removal of Covid restrictions by four weeks is incredibly hard for our sector to stomach," says Emma McClarkin, chief executive of the BBPA.

“Pubs and licensees are struggling to recover with the current restrictions they face and debts are accumulating. Every week the current restrictions stay and uncertainty continues, the likelihood of pubs being lost forever increases.

“A full package of Government support is now critical for our sector until it is guaranteed to open fully without any restrictions."

 As a minimum, McClarkin has called for an immediate three month extension to the business rates holiday; the ability to defer loan payments; and a further extension of VAT support.

"Grants for businesses particularly affected, such as those pubs who cannot still reopen because of the current restrictions, must now also be put in place,” she adds.

Lifting restrictions 'only way to save sector'

Research from CGA and AlixPartners published earlier this month revealed that one in four licensed premises in Britain have yet to reopen​, despite the return of indoor service in May.

Around nine in ten high street pubs (92.9%), food pubs (91.8%) and community pubs (89.6%) are now back trading, alongside 89.2% of casual dining and other restaurants.

However, social distancing and restrictions in place still make it unviable for swathes of venues to open, and 45.2% of Britain’s sports and social clubs remain closed, alongside 50.9% of large venues and 27.0% of bars.

Johnson said yesterday that he was 'confident' there would be no need for a further delay to the final easing of restrictions beyond 19 July, but when pressed was unable to give a 'cast-iron guarantee'.

“A final lifting of restrictions is the only way to save the sector from disaster and enable it to play its part in a national economic recovery, to support the Government’s Jobs Plan, delivering jobs, growth and investment at pace and across all the regions," says Nicholls.

"A single ray of light is that the limit on weddings will be lifted but support must be granted and, crucially, delivered, to the vast majority of other hospitality businesses.

"Not least, it must reach those who are still unable to trade at all, including  nightclubs and those who still cannot operate their main income streams, such as soft play centres, as well as businesses such as contract catering, who operate from other businesses venues and so have been unable to access many reliefs and grants.

“Businesses need a swift, publicly-stated commitment that such support will be in place in the event of any delays, giving them much-needed reassurance after more than 15 months of closure and severely disrupted trading.

"Hospitality is desperate to get back to what it does best and can play a key role in the economic recovery of the UK - but only once it is given permission to trade freely.

"The Prime Minister asked for one more heave to get us out of restrictions – hospitality, too, requires one last heave, to be able to drive recovery.”

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