Yesterday (16 March), we incorporated within our “Coronavirus legal guidance – do’s and don’ts” article for Pub & Bar not only (a) reference to the financial support promised to hospitality businesses but also (b) relevant comment arising from the Prime Minister’s statement on coronavirus delivered by him yesterday evening.
In particular we focused on Boris Johnson’s comments that:
- everyone in the UK should avoid “non-essential” contact with others and “unnecessary travel” and
- people should avoid pubs, clubs, theatres and social venues (i.e. all other hospitality venues such as restaurants, hotels, cinemas, SEV premises, casinos, bingo clubs, betting shops, AGCs, amusement arcades and other hospitality and leisure businesses).
This evening (17 March), the Prime Minister and the Chancellor of the Exchequer, Rishi Sunak (together with the government’s chief scientific advisor, Sir Patrick Vallance) have delivered further statements.
The Prime Minister’s statement of this evening (17 March) can be downloaded below, as too can the Chancellor’s statement, which carried throughout the reassuring theme for business (notably including the hospitality and leisure sectors) – “We will do whatever it takes”.
Of most immediate interest to operators within those sectors will be the following aspects of the Chancellor’s statement dealing with further financial support for hospitality businesses affected by the coronavirus crisis:
- He has said: “This government will give you all the tools you need to get through this. We will support jobs, we will support incomes, we will support businesses, and we will help you protect your loved ones. We will do whatever it takes”;
- He has described coronavirus as not only “a public health emergency but also an economic emergency”;
- He has promised government intervention “on a scale unimaginable only a few weeks ago”, promising that “the government will stand behind business small and large”, adding that “there are concerns about the impact on pubs, clubs and theatres”;
- He has announced government backed loans “to get businesses through this” with £330billion of guarantees to enable all business to be able to get a loan or credit “on attractive terms”, adding that “if more is needed, it will be provided”;
- From the start of next week (23 March), liquidity for larger firms will be provided at low cost under a new lending facility agreed with the Governor of the Bank of England;
- Also from the start of next week, bank loans for small and medium-sized businesses, access to which will be possible under the new Business Interruption Loan Scheme announced in last week’s Budget, will increase from the previously promised £1.2million to £5million in value, with no interest for the first six months. The government has already promised to provide to lenders with a guarantee of 80% on each loan (at no charge to the borrower);
- Having announced that a forthcoming support package for airlines and airports, he indicated that specific opportunities to support the other “most affected sectors” would be identified indicating that this might include “possible regulatory forbearance”;
- He specifically identified “concerns about the impact on pubs, clubs, theatres and other hospitality, leisure and retail venues”;
- Commenting on cashflow and fixed costs concerns for pubs and other hospitality sector venues, he said that “for those businesses which do have a policy that covers pandemics, the government’s action is sufficient and will allow businesses to make an insurance claim against their policies”, but that the government will go further to support those businesses that do not have insurance;
- For businesses in the retail, hospitality and leisure sectors, with premises having a rateable value under £51,000, the government will provide an additional cash grant of up to £25,000 per business “to help bridge through this period”;
- He also said that all businesses in those sectors (rather than merely those with premises having a rateable value under £51,000) will get a “business rates holiday”, meaning they will have no liability to pay business rates for 12 months;
- In addition, there will be an increase from £3,000 to £10,000 in the amount of the one-off grant to the 700,000 smallest businesses currently eligible for Small Business Rate Relief or Rural Rates Relief;
- The Chancellor is also taking a new power in the COVID-19 Bill to offer whatever further financial support he decides is necessary.
Further detail is awaited but the hospitality and leisure sectors should take some considerable comfort from the fact that the government has clearly been listening to their call for help. With cashflow likely to be the key issue, it is essential that this further financial assistance is made available as quickly as possible.
[See our subsequent posting dated 20 March 2020 entitled “Government tells pubs, clubs, restaurants, casinos etc to close and announces further financial support“]
Responding to the Chancellor’s further package of financial support measures on 17 March, outlined above, UKHospitality chief executive Kate Nicholls is quoted in Propel newsletter on 18 March 2020 as saying:
The chancellor has clearly been listening and these extra measures represent proper progress on last week’s Budget. The focus now has to be on making sure hospitality businesses can draw down the support loans and other funds while they still have businesses to operate, such are the levels of urgency for most businesses. We will wait with great anticipation and hope the detail on employment support measures live up to the hype but, if they are substantive, this could amount to a really helpful raft of support. This needs to come urgently as jobs are being lost every day. Cash flow is the key focus for companies endeavouring to survive. We only hope this can be enough.
On 19 March 2020:
- the Prime Minister said:
My message to companies is think very carefully before you start laying off staff. Stand by your staff because we will stand by you. And you will hear more about that in the course of the next day or so. The chancellor will be saying more about the package we are putting in place for workers across the country to support everybody through this difficult time. We’ve been talking to the trade unions, and others, and we think we have a great package ready to go. So, I hope people will stick by their employees because we’re all going to need them.
- and, on behalf of UKHospitality, Kate Nicholls said:
We have put forward a simple proposal that could be implemented immediately and avoid people having to apply for universal credit worrying about their income – reverse PAYE and direct that cash support to workers through the payroll. It could be done immediately. Give a National Insurance Contribution and VAT holiday to keep cash in the business to pay wages. Businesses with no income want to stand by their people and do the right thing – it is government in-action that is stopping us and it is heart-breaking.
In a news item published on 20 March 2020, the BBC reported that:
Chancellor Rishi Sunak is to announce an employment and wage subsidy package to try to protect millions of jobs. Talks went on into the night with business groups and union leaders, who urged the government to help pay wages amid the coronavirus pandemic. Many firms are warning of collapse, wiping out thousands of jobs, as life in the UK is largely put on hold.