One-off grant for bars and pubs insufficient

2nd December, 2020 by Nicola Carruthers

The UK government has pledged a £1,000 (US$1,335) payment for drinks-led venues in England forced to close under the tier system, a move described as falling “far short of the bare minimum required” to save businesses.

More than 50,000 on-trade venues in England will be unable to operate under the tougher restrictions

The UK government enforced a tougher three-tier system from today (2 December), which will see bars and pubs in tier two regions only trading if customers have a ‘substantial meal’. In tier three, bars and pubs must shut and can only offer takeaway services. The new measures have been enforced as the month-long second lockdown ends in England.

More than 50,000 on-trade venues in England will be unable to operate under the tougher tier restrictions, according to recent data.

Ahead of the new restrictions, prime minister Boris Johnson announced an additional £1,000 Christmas grant yesterday for drinks-led bars and pubs in tiers two and three, which have been told to close.

The £1,000 payment is in addition to the existing £3,000 (US$4,000) monthly cash grants for businesses, the government said.

Johnson added: “Pubs are at the heart of communities across the country and they have been among the businesses which have suffered the most during the pandemic.

“While we can’t make up for all the trade they will lose over Christmas, I hope this new £1,000 grant – on top of the furlough, VAT [value added tax] and business rates relief and existing grants, goes some way to help them weather the economic storm.”

However, Kate Nicholls, chief executive of trade group UK Hospitality, said the payment “does not even count as a token gesture”.

The payment is equal to just 1.1% of the industry’s takings in 2019, Nicholls said, and “falls far short of the bare minimum required to keep these businesses alive”.

The hospitality industry is expected to lose an estimated £7.8 billion (US$10.4bn) in sales due to the new tier system, according to UK Hospitality. The restrictions are being enforced during the Christmas period, a key revenue driver for the on-trade.

Nicholls continued: “The government’s entire approach to this lacked any sliver of logic, as evidenced by the farcical debate around Scotch eggs over the past 24 hours. There needs to be a much clearer and supportive approach from the government and this means providing far more support immediately.

“The new tier system condemns nine out of 10 hospitality businesses to being unviable by the New Year. This is not just a threat to community wet-led pubs but also neighbourhood restaurants independent hotels, nightclubs and other hospitality venues who are now staring failure in the face. The sector will lose £8bn of revenue in December and bear £0.3bn [US$400.3m] of costs of closure and restricted trading.

“The government’s own figures say a third of businesses are at risk of insolvency. This jeopardises over a million jobs and threatens collapse across the supply chain.”

UK Hospitality also urged for a industry-specific replacement of the Job Retention Bonus and an extension of the rent debt moratoria to June 2021. In addition, the trade body has reiterated its call for an extension of the current VAT cut and a business rates holiday for the next 12 months.

Fund for hospitality

Furthermore, the trade group called for the creation of a Hospitality and Tourism Recovery Fund to support the sector, similar to the government’s £1.57 billion (US$2.1bn) Culture Recovery Fund, which supports cultural sites such as museums, galleries and theatres.

UK Hospitality said the move follows supermarket Tesco’s recent announcement that it will repay £585m (US$781m) of grant support to the government. As such, the trade group wants the returned money to be spent on creating the fund.

Nicholls said: “It is an admirable and altruistic gesture from a company that is clearly in a much better financial situation than the vast majority of the those in hospitality. The question now is what happens to this money, which the government had intended to invest in supporting businesses.

“We are calling on the government to earmark that money, to create a fund for those hospitality and tourism businesses that are at [a] high risk of failure, have been closed since March or that have had no grant support, similar to the Cultural Recovery Fund.

“A Hospitality and Tourism Recovery Fund, including rent support to preserve the future of our high streets, would deliver a huge boost to businesses that are only just clinging onto life right when they need it most.”

UK Hospitality and pub trade body the British Institute of Innkeeping (BII) are also urging the government to ‘revamp and simplify’ the currently alcohol duty system. The trade groups are pushing for a more flexible structure to ‘support economic growth, boost tax revenues and contribute to the government’s public health agenda’.

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