Chancellor of the Exchequer, Rishi Sunak, has today (24 September 2020) made a speech in Parliament (that you can download below), unveiling the UK government’s Winter Economy Plan, intended to protect jobs and support businesses over the coming months.
Of particular relevance for the UK hospitality sector are the following elements of his speech:
- with effect from 1 November 2020, a new six-month Job Support Scheme will replace existing furlough arrangements under the Coronavirus Job Retention Scheme; this scheme is designed to protect “viable jobs” in businesses that are facing lower demand over the winter months due to coronavirus, meaning that employees must be working at least 33% of their usual hours and be paid for that work, as normal, by their employer
- the existing reduced (5%) VAT rate for the hospitality and tourism industries will be extended until the end of March 2021
- to give businesses longer to apply for government loan schemes, application deadlines are being extended to the end of this year
- ‘Pay as you Grow’, a new successor loan programme to the Bounce Back Loan Scheme, will enable:
- such loans to be extended from six to ten years,
- businesses that are struggling to choose to make interest-only payments and
- anyone in trouble to apply to suspend repayments altogether for up to six months.
- Coronavirus Business Interruption Loan Scheme lenders will be given the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
The Chancellor’s emphasis within his speech on “supporting people …. in viable jobs which provide genuine security” and his candid admission that he “cannot save every business” and “cannot save every job” will create a major problem for all employers and employees in businesses that are “fundamentally viable but can’t operate at all due to local or sector restrictions” (to quote Carys Roberts, Executive Director of the IPPR thinktank). Within the hospitality sector, nightclubs and sex establishment venues spring to mind in this respect.
UKHospitality has reacted to the Chancellor’s speech as follows:
Commenting on today’s announcement by the Chancellor, UKHospitality Chief Executive Kate Nicholls said:
“The announcement of further restrictions yesterday [sic] was a significant hammer blow that will inevitably depress trading. It was crucial that the Chancellor delivered support today that specifically targeted the hospitality sector which has been hit harder than any.
The announcement of flexible employee support is a move in the right direction, but hospitality needs more targeted efforts to support jobs. Almost 1 million people in our sector are still on furlough. We need Government to go further in hospitality, recognising the greater restrictions imposed upon us, and pick up the full cost of unworked hours. This would be a relatively low cost for huge reward for our workforce. Full support to sustain people in their jobs during what could be a pretty bleak winter for hospitality would be a great step forward.
Looking ahead, the extension of the VAT cut was absolutely critical. UKHospitality had pushed hard for it, so it is great to see the Government taking note of our major concerns about recovery into 2021, though this must be extended further. The announcement of longer tax deferrals and the option of longer loan repayments should deliver some much-needed breathing room for employers.
Things were looking grim for our sector yesterday and we were desperately hoping for some good news. The Chancellor has given us some reason to be positive again, but we urge him to engage with the trade on specific measures to keep people in work. While some of these measures announced today will give businesses a future to shoot for, and hope that they can begin to rebuild, we are still not out of the woods.”
The BBPA has responded as follows:
Commenting on the plan, Emma McClarkin, Chief Executive of the British Beer & Pub Association, said:
“Following the additional restrictions announced earlier this week and their devastating impact on the already precarious situation our sector is in, we were really hoping for a strong package of support today. Some elements of the Chancellor’s plan today are welcome, but do not go nearly far enough to save the thousands of pubs and jobs that we have highlighted are at serious risk.
The VAT cut extension on food and soft drinks will help our sector and it is great to see the Chancellor answer our urgent call for this. However, the extension is only for six weeks and only takes us through to the end of the current restrictions – it needs to be much longer to help our sector recover.
Furthermore, where those pubs and bars that are not food focused are concerned, the Chancellor has missed a golden opportunity to extend the VAT cut to include alcohol.
The new flexible job support scheme is needed considering that the furlough scheme will end next month, but with a lower level of funding from Government that will cost employers more, we are not confident it is enough to protect jobs in the current trading conditions. We will need to closely monitor the effectiveness of this scheme with our members and invite the Government to work with us if changes to the scheme are required.
As brewing businesses are also greatly impacted by the curfew and the tighter restrictions pubs now face, they need more support too. With no direct support for them in today’s announcement, it is imperative that a beer duty cut is top of the list for the Chancellor at the next Budget, which would greatly help wet led pubs too.
It is very concerning to see the Chancellor not extend the business rates relief for pubs. Pubs now face a cliff edge come March 2021 where they will have to pay on average £25,000 each per rate paying pub. That’s a cost of £800 million to the sector which will be the final straw for many pubs. We need the Chancellor to review this and extend the business rates holiday as a matter of urgency.
Increasing access to Government loans, and extending the lengths to pay them back, will help some pubs, but for many, taking on further debt in the form of a loan isn’t even a viable option – particularly at this stage.
We need the Government to recognise that consumer confidence is fragile and the additional restrictions that could be in place for a further six months will only make this worse. We are asking them to consider ways they can help boost consumer confidence including running the successful Eat Out To Help Out scheme again and offering sector specific grants for pub businesses.”
At the time of publication of this website posting, the Betting & Gaming Council has still to respond to the Chancellor’s speech, but earlier today it made the following rescue package call:
Casinos call on Chancellor to announce immediate rescue package to save thousands of jobs under threat due to Covid curfew
Casino bosses have called on Rishi Sunak to announce an urgent Government rescue package to save thousands of jobs in the sector which have been put at risk by the Covid curfew.
A total of 14,000 posts are at risk as a result of the shutdown, which forces hospitality and leisure venues to shut down at 10pm.
The Chancellor is due to set out his plans in a statement to MPs and casinos have stressed that because up to 70 per cent of their trade is done after that time, they will be uniquely affected by the shutdown.
The casinos also point out that senior Public Health England officials have agreed that their anti-Covid measures – including Perspex screens and best-in-class track and trace systems – are excellent.
In advance of his Commons statement, the casino chiefs have urged Mr Sunak to unveil a generous package of measures to keep them in business until the pandemic is over.
As a first step, they have called for an extension of the Job Retention Scheme, which is due to end on 31 October.
Other taxpayer-backed initiatives should also be considered as a way of keeping the businesses viable and contributing to the Treasury as it tries to rebuild the British economy, the casinos say.
Michael Dugher, chief executive of the Betting and Gaming Council, said:
“Casinos have demonstrated that they are Covid-secure, and yet are being ordered to close their doors at 10pm. This is an illogical and disproportionate decision which puts thousands of jobs at risk. The Chancellor must implement an urgent economic package which enables casinos to stay open and protect jobs so that, when the pandemic is over, they can play their part in getting the British economy back on its feet.”
You can also download below the GOV.UK News Story item entitled “Chancellor outlines Winter Economy Plan”.
1. The BGC has now published its following response to the new Job Support Scheme announced by the Chancellor:
Responding to the Job Support Scheme announced by Rishi Sunak in his Winter Economy Plan, Michael Dugher, chief executive of the Betting and Gaming Council, said:
“The Chancellor has gone some way towards providing support for casinos, who are an important part of the hospitality, leisure and tourism industries that will help power the country’s economic recovery. We asked for his help and we’re pleased that he has listened.
However, given the unique challenge that the curfew presents to an industry which does between 50 and 70 per cent of its trade after 10pm, the package as it stands does not alleviate much of the sector’s concerns. Casinos have suffered considerable blows in recent days and weeks and will need all the support they can get to be able to play their part in the recovery of towns, cities and communities.
The wage subsidy scheme will help in some way as the industry continues to reel from the curfew restrictions. Operators would far rather be able to trade than rely on subsidies but after a gruelling few days this is some respite.
Casinos are very proud of the high numbers of viable jobs that they sustain and now have a better chance of emerging on the other side of this curfew period, thanks to the Chancellor’s scheme .”
2. The Night Time Industries Association has published the following response to the Chancellor’s Winter Economy Plan:
Shock, horror and despair have reverberated across swathes of the night-time industry as more details of the Chancellor’s Winter Economy Plan have been revealedIt is now clear that there is no support for businesses in the sector which are still forced to remain closed due to COVID-19 restrictions. Even the businesses that can reopen in the industry are unable to see the benefit of the scheme as the recent 10pm curfew makes operating barely viable.The government has chosen to support only businesses able to operate viably and is completely ignoring those who have been unable to trade since March whilst leveraging crippling restrictions on the businesses that can open.The night-time economy has been totally disregarded by government policy. The government narrative has delivered empty promises and left us an industry in exile. Debt terms have been driven further down the road for a sector that is already overburdened financially, with many of our members languishing in up to three quarters of commercial rent arrears with no certainty on whether they can pay this.It is simply not good enough to allow much loved entertainment, cultural and social institutions in an industry that, pre Covid, employed over 1.3 million and contributed £66 billion per year to the UK economy to disappear with all the corporate and personal pain that causes.”At some point these businesses will have to draw a line and will be forced to make a decision on the future of their businesses and their workforceThe simple message to the Government is more direct support is needed and needed now!
Quarter of hospitality businesses believe they could fail in next 3 months without further support
Trade bodies say sector is teetering on the edge following new restrictions announced by Prime Minister, which could result in 540,000 further jobs lost
Pub and hospitality trade bodies the British Beer & Pub Association, UKHospitality and the British Institute of Innkeeping have unveiled new findings today showing that almost a quarter (23%) of their members think their businesses will fail by the end of the year without further Government support.
The findings, from a survey of members of all three trade associations conducted by hospitality market research company CGA, revealed the high level of concern about the future of the pub and wider hospitality sector without further support from Government. This was before the latest restrictions for pubs, restaurants and the wider hospitality sector were announced by the PM earlier this week, including a 10pm curfew and table service only, which will only make the situation worse.
The survey also found that one in eight hospitality staff have already been made redundant, and that more sector jobs are expected to be permanently lost when the Government’s furlough scheme comes to an end in October. On average, businesses believe their workforce will be 25% lower by February 2021 compared to February this year – a decline of 675,000 jobs lost from the sector in a year.
Only 7% of respondents said they were feeling optimistic about the prospects of the hospitality sector over the next 12 months, down from 23% in August and 19% in July when respondents were previously asked the same question.
With such a gloomy outlook for the sector, exacerbated by the Prime Minister’s announcement earlier this week on further restrictions, the trade bodies have all called on the Government to take drastic action.
They have urged the Government to immediately put in place a new sector-specific employment support package and to extend the VAT cut and business rates holiday for the sector.
These measures, they say, will help pubs and hospitality businesses survive any further disruptions to their operations, enabling them to work towards a safe and sustainable recovery heading into 2021 and beyond.
Emma McClarkin, Chief Executive of the British Beer & Pub Association, said:
“This research shows pub businesses were already teetering on the edge. Now the Prime Minister has announced even more restrictions for them, it is clear much more support will be needed from the Government to ensure they survive.
“An immediate stimulus package is required for our sector in the form of an extension to the furlough scheme and business rates relief, plus continuation of the VAT cut to food and soft drinks and a significant cut to the UK’s excessively high beer duty.
“Only by taking these measures can the Government save our pubs, hospitality businesses and as many as 540,000 jobs. If the Government doesn’t act now it would be unforgiveable.”
Kate Nicholls, Chief Executive of UKHospitality, said:
“The future of the sector is still very much in the balance. Many venues have still have not reopened and those that have are operating at reduced capacity and a fraction of normal revenue. We have already had some high-profile casualties and far too many job losses.
“The additional restrictions announced this week place even further burdens on a sector that is operating with razor-thin margins and needs all the help it can get. It is vital that these restrictions are reviewed regularly.
“We need comprehensive financial support so that those businesses that survive the winter can begin to rebuild next year, starting with a package of measures to support short time working. The VAT cut for hospitality must be extended through 2021, as must the business rates holiday. We also need the government to step in now and help to deal with the rent debt that has built up over months of enforced lockdown.”
Steven Alton, Chief Executive of the British Institute of Innkeeping, said:
“This insight clearly reinforces the urgent need for a specific package of Government support for our sector, especially in light of the devastating impact of new restrictions both on trading and in severely damaging hard fought consumer confidence. Government support in our sector is an investment which will deliver strong returns economically, with skilled jobs and allowing our venues to continue to be at the centres of their communities across the UK.
Despite the immense fragility of their own businesses, 23% of respondents still see playing a key role in their communities as a top priority. We have fully played our part in this pandemic both in successfully delivering extensive changes to our venues to keep our staff and customers safe as well as delivering essential social value to communities across the UK.”