Hospitality sector needs flexible government support

13th May, 2020 by Nicola Carruthers

The UK government has extended its furlough scheme to October but trade bodies have warned the hospitality sector needs “continued and flexible” support on salaries, rents and insurance to save millions of jobs.

Spirits Bottles

On-trade suppliers need government support, the WSTA has said

Trade associations UK Hospitality and the Wine and Spirit Trade Association (WSTA) have welcomed the extension of the Coronavirus Job Retention Scheme, which was due to end in July. UK chancellor Rishi Sunak announced the extension of the scheme to October yesterday (12 May), whereby the government pays 80% of wages for employees who are not working, up to £2,500 (US$2,900) a month.

However, the chancellor said that from August, employers would need to “share with the government the cost of paying salaries”.

UK Hospitality said the announcement of the extension was a “sensible, positive and timely move”. It is estimated that around 2.4 million people are currently on furlough in the hospitality sector.

The trade body’s chief executive, Kate Nicholls, said: “The scheme has been a crucial lifeline for many businesses and employees. It has helped hospitality overcome the initial crisis, saved businesses and kept jobs open.

“We will now be actively engaging with government about how the scheme will operate beyond July. The full 80% may need to be extended past July for some businesses in sectors like hospitality that will still operate at much reduced levels of trade, or not yet be able to open. Our businesses will need as much warning as possible if they are to be expected to plan ahead for eventual venue reopenings.”

UK Hospitality is planning to publish a series of protocols designed to support the safe reopening of venues once lockdown measures are lifted.

However, Nicholls warned there needs to be “increased flexibility” for the hospitality sector.

She continued: “Hospitality businesses are not able to go from standstill to full capacity overnight. The additional flexibility being introduced to the scheme will allow our workers to return to work in a safer, graduated way – that is crucial to help the government to safeguard public health, jobs and businesses.”

Meanwhile, the WSTA said the extension of the furlough scheme would give its members “much needed breathing space to plan for a way out of lockdown”.

Miles Beale, chief executive of the WSTA, said: “It is essential for those in the hospitality sector and their suppliers, who are prevented from re-opening, that they receive the same 80% salary support until the end of October.

“We are continuing to push for the government to broaden the definition of hospitality to ensure the suppliers to our pubs and restaurants don’t slip through the net and end up facing closure.”

‘Dire and unique position’

UK Hospitality also revealed GDP estimates released today (13 May) by the Office for National Statistics, which showed the nation’s economy fell by 2% in the first quarter of 2020. The figures were compared to the UK Hospitality Quarterly Tracker, which showed a Q1 decline in sales of 21.3% for the UK hospitality sector.

Nicholls said: “The hit the economy has taken is a substantial one but it is eclipsed by the hammering hospitality has taken. The declines we are seeing in other sectors, alarming though they may be, are incidental compared to the truly alarming hit that ours is taking.

“The economy’s 5.8% decline in March alone will have been similarly dwarfed by hospitality’s misfortune, as lockdown and forced closures came into force, stopping trade for most venues altogether.

“This shines a light on the dire and unique position in which our sector has been placed. Ours was the first to take a hit, took the hardest hit, and will take longer than most to recover.

“Hospitality needs additional support to ensure that swathes of businesses do no fail altogether and to avoid millions of jobs being lost. We need continued and flexible support on furlough, rents and insurance, so that businesses can plan ahead, save livelihoods and help to drive economic recovery.”

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