Sunak splits the sector

From “hugely generous” to “nowhere near enough”, industry response to the chancellor’s latest round of business support was mixed to say the least.

Speaking in the Commons yesterday (22 October), Sunak highlighted that the extent of the new funding – which will include £2,100 grants for businesses and an improved Short Time Work Scheme – was predicated on talks with hospitality operators and trade bodies earlier in the day, who informed the chancellor of a “significant fall in consumer demand, causing profound economic harm to their industry.”

In light of the unsustainable position in which thousands of hospitality businesses under tier 2 restrictions have found themselves in recent weeks, he added that he made “no apology” for “responding to changing circumstances” - but does this ‘unapologetic’ response go far enough?

According to some of the sector’s leading trade bodies it’s a very good start, with UK Hospitality CEO Kate Nicholls going so far to herald the “hugely generous” support package as “very welcome news just when we needed it.”

Nicholls commended both the changes to the Job Support Scheme and the backdated grant scheme, which she said “will provide a crucial lifeline for businesses struggling with low footfall and ongoing costs.”

Encouraged by the government’s willingness to listen to the plight of the sector, Nicholls added that the new measures will give “businesses a much-enhanced chance of being able to overcome the challenges and survive into 2021.”

However, despite this “significant step forward,” Nicholls stressed that with restrictions including the 10pm curfew continuing to severely impact the sector, there is “still a long way to go.”

“We will be in close contact with the government to make sure that our members, and the whole of hospitality, gets the support it needs and deserves,” she said.

The British Beer and Pub Association CEO Emma McClarkin was equally positive, explaining that the support package “will help thousands of pubs with tier 2 restrictions who otherwise faced devastation to their businesses.”

With the “high” alert level restrictions making a significant number of pubs “completely unviable,” McClarkin said that whilst the additional cash grants would provide a “crucial lifeline” for the sector, the government must ensure grants are exempt from EU State Aid restrictions, and keep grant delivery under review in terms of covering actual fixed costs for businesses forced to close in tier 3.

“They must also be delivered quickly to ensure pubs do not permanently close due to lack of cash flow caused by not receiving the grants in time to save them,” she said.

This was a concern shared by Andrew Sanford, business advisory partner at accounting, tax and advisory firm Blick Rothenberg, who said that giving local councils the responsibility of grant hand-outs may delay distribution.

“Many hospitality businesses will also feel that this will not cover perishable stocks which may have to be thrown away,” he added.

On the changes to the Job Support Scheme – with workers able to qualify if they only work 20% of their usual hours and the minimum employer contribution reduced from 33% to 5% – he said that although the new measures will give surviving businesses a “much bigger carrot to continue, and retain their key staff” this is predicated on the assumption that they haven’t had to make staff redundant already.

And, at odds with some of the leading trade bodies, this ‘too little too late’ narrative has been echoed by many in the industry.

Night Time Industries Association CEO Michael Kill said any help from the Chancellor is welcome, but “the brutal reality is that for so many businesses, employees and freelance workers this is too little too late as we have already lost several hundred thousand jobs in the weeks leading up to this announcement.”

With regards to the late-night sector, Kill voiced his frustration at the government’s refusal to model the economic consequences of its “worst case scenario” restrictions, “as the damage to this sector is wreaking havoc on people’s lives,” he said.

“And despite this latest support, many businesses still have some key questions around commercial rent debt, and more importantly have an ongoing need for a roadmap to recovery.”

Hospitality Union founder Jonathan Downey – who was recently forced to liquidate his street food concept Street Feast – said the support was “nowhere near enough” and “far too little too late.”

Downey argued some SME’s will benefit from the grants and improved JSS, but nothing in the new package will make a significant difference to the number of businesses that need it, and will therefore be unable to save thousands of jobs.

“I don’t blame the Chancellor,” he said. “He has an impossible job trying to find financial fixes for the disastrous policy decisions of his cabinet colleagues.

“He is being asked to treat the symptoms, not the cause, and our industry will not recover unless they cancel the curfew and remove the restrictions on mixed households socialising in our venues.”

Greater Manchester Night Time Economy Advisor Sacha Lord said that for many in Manchester – which entered tier 3 level restrictions today – “this is too little, far too late.”

“Just before 10pm tonight, the chancellor will call last orders on many of our pubs and bars, for good,” he said on Twitter yesterday afternoon. “The whole supply chain forgotten, ignored and hung out to dry.”

The Pepper Collective CEO Andrew Fishwick shared similar concerns from his London-centric perspective, arguing that the capital’s title of “the greatest restaurant city in the world” remains under threat despite the chancellor’s additional support.

“Whilst this is stepping stone in the right direction, more support needs to be provided to smaller, entrepreneurial businesses, which harbour the next generation of talent but lack deep pockets,” he said. “These are the restaurants that make London truly exceptional, and they need help now.”

In the current crisis, clearly any and all financial support is welcome, but with CGA reporting just last week that there are now nearly 25,000 fewer licensed premises open in the UK than there were before lockdown, the accusation of ‘too little too late’ holds all-too true.

The news of additional jobs support and direct grants is certainly a step in the right direction, but if the government’s wavering and erratic approach to tackling the virus over the last seven months is anything to go by, the industry might be wise to prepare for one step forward, three steps back.