Two-thirds of hospitality firms will run out of cash by May

Bars in England could be allowed to partially reopen in April but two-thirds of hospitality venues do not have enough money to last until May, trade body UK Hospitality has warned.

Yesterday (22 February), UK prime minister Boris Johnson revealed bars and pubs in England could reopen on 12 April under a new four-step plan to bring the country out of lockdown.

The reopening of parts of the hospitality sector falls under the second step in the plan, which is all subject to meeting four tests on vaccines, infection rates and new coronavirus variants.

If the requirements are met, hospitality venues would be able to serve people outdoors only from 12 April. There would be no need for customers to order a ‘substantial meal’ with alcohol and no curfew, however, it would be table service only.

Provided all continues to go to plan, from 17 May, under the third step of the plan, indoor hospitality would be allowed to reopen.

By 21 June, the fourth step of the plan could come into play, meaning all legal limits on social contact would be removed.

However, responding to the announcement yesterday, UK Hospitality said it was “devastating” that the reopening date for hospitality was so far away. From the start of November 2020, the sector will have been closed for almost 200 days on 12 April.

“The prime minister says that the reopening schedule is driven by data, yet all the data points to hospitality being relatively safe and linked to only a tiny number of cases,” said Kate Nicholls, UK Hospitality chief executive. “Vaccinations and the fall in infection rates has de-risked our reopening even further. Over the past year, the government has repeatedly miscalculated the risks posed by hospitality.

“This delay in reopening will make the job of survival all the more difficult for businesses only just clinging onto existence. It is much more than just an inconvenience for many employers in our sector, it is another delay that they cannot afford and, for too many, will not be able to survive.”

Two-thirds of businesses will run out of cash before May

Nicholls explained only 40% of hospitality businesses have an outdoor area, some of which amounts to just a few chairs and a table.

While the end of substantial meals and curfews was a welcome “relief”, Nicholls stressed the rule of six and only allowing two households to mix would see many firms trading “below substantial levels”. She urged the government to provide a “substantial package of compensation” for the industry in next week’s budget.

“The job for the government now is to make sure that our sector survives this further period of closure intact,” Nicholls added. “The chancellor has just nine days to save thousands of businesses and hundreds of thousands of jobs that simply will not be there without a substantial package of compensation.

“According to the latest Government data nearly two-thirds of hospitality businesses will run out of cash before May, before they are allowed to re-open.

“In the immediate term, we need a generous compensation package that goes beyond what was offered in January if we expect businesses to survive, with a commitment to eliminate new costs that are due to hit, such as HMRC tax bills and loan repayments.

“An extension of the VAT cut and business rates holiday must be confirmed along with a targeted extension of the furlough scheme.

“We must also have an extension of the rent moratorium, with loan repayments and HMRC debt delayed in order to give businesses some breathing room from the ruinous mountain of debt that has built up for too many. Asking businesses to start paying this money back when they are not even open could be terminal for many.”