WSTA urges UK govt to address cashflow crisis

17th April, 2020 by Melita Kiely

The UK government has extended the Coronavirus Job Retention Scheme for an extra month, but the Wine and Spirit Trade Association (WSTA) has warned redundancies are “increasingly likely” unless ministers address the hospitality sector’s cashflow crisis.

Miles-Beale-WSTA

Miles Beale, WSTA chief executive, has warned the UK government redundancies across the hospitality sector are increasingly likely

UK chancellor Rishi Sunak first announced the Coronavirus Job Retention Scheme last month, which will see the government pay 80% of wages for employees who are not working through grants worth up to £2,500 (US$2,900) a month.

This week, the government extended the eligibility cut-off date for the scheme to 19 March 2020. Initially, to quality for the support, workers had to be employed on 28 February 2020.

The scheme initially pledged to cover wages from March to May, but Sunak has extended its availability to also include June, and said he would continue to review the scheme and extend it again if necessary.

“We’ve taken unprecedented action to support jobs and businesses through this period of uncertainty, including the UK-wide Job Retention Scheme,” Sunak said. “With the extension of the coronavirus lockdown measures yesterday, it is the right decision to extend the furlough scheme for a month to the end of June to provide clarity.

“It is vital for people’s livelihoods that the UK economy gets up and running again when it is safe to do so, and I will continue to review the scheme so it is supporting our recovery.”

WSTA calls for cashflow issues to be addressed

While the WSTA has welcomed the extension of the scheme, it warned that the government’s lack of focus in addressing cashflow issues being felt across the hospitality industry meant redundancies were becoming increasingly likely.

“We welcome the extension of the job retention scheme, which will put off collective redundancy of furloughed workers for at least a month,” said Miles Beale, chief executive of the WSTA. “The scheme is a vital lifeline for the entire hospitality industry. However, the furloughing of staff won’t prevent redundancies altogether – or indeed put them all off until further down the line.

“The lack of government action to address the cashflow crisis being experienced by hospitality suppliers and outlets means redundancies are increasingly likely. Indeed, [I] hope the Treasury Select Committee takes evidence on this key issue at its hearing on Tuesday.

“The WSTA has proposed practical measures to address the cashflow crisis for these businesses, which are exacerbated by large excise duty payments. The government has still not introduced a blanket duty deferment and needs to improve its ‘time to pay’ approach and communication so that businesses can benefit, including putting something in place for the many businesses that don’t have duty deferment accounts. We would also want to see business rates relief for all those firms supplying our pubs, bars, clubs and restaurants.

“Wine and spirit sales are worth £10 billion [US$12.5bn] to the UK hospitality industry. To ensure the hospitality sector recovers the suppliers must be given the support they need to survive. If – as seems likely – the hospitality trade needs to prepare for a phased re-opening and heavily suppressed demand over the next months, all of this support will be needed.”

UK Hospitality welcomes extension

Trade body UK Hospitality said it “pushed the government hard” to extend the Job Retention Scheme, and that it welcomed the government’s decision as it would give businesses more “breathing room”.

“This extension itself is good news and will give us more breathing-room to help ensure employers are in a stronger position once they are in a position to reopen,” said Kate Nicholls, UK Hospitality chief executive. “The decision to keep the scheme under review could be absolutely critical for hospitality.

“It will allow us to continually make the watertight case that hospitality is a special case. Once the lockdown is lifted, social distancing measures are likely to remain in place. This will cause problems for the sector, which is all about socialising.

“Some businesses are not going to be able to immediately reopen and many more will not be able to reopen fully. With flexibility in the furlough scheme, it gives us a much better chance of keeping businesses alive and keeping our team members in jobs.

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