Economy

UK hospitality bosses say £1bn support package falls short

Sunak offers one-off grants to companies hit hard by Omicron variant

A hospitality worker waiting for customers outside a restaurant in London. Some 200,000 firms will be eligible for one-off grants to offset losses. Photograph: Tolga Akmen/ AFP

Jim Pickard
Alice Hancock
Tue Dec 21 2021 - 20:26

Hospitality businesses warned £1 billion (€1.2bn)of new support promised by UK chancellor Rishi Sunak for companies hit hard by the Omicron coronavirus variant fell far short of what they needed to survive a plunge in bookings.

While trade groups including UKHospitality welcomed the chancellor’s new package for companies affected by Omicron, hospitality executives said it was “too little, too late” and that some businesses would be forced to close if there was no further government help.

The warning came as British prime minister Boris Johnson said no additional Covid-19 restrictions would be introduced in England before Christmas, although the prime minister did not rule out new measures soon after.

The rapid spread of Omicron and warnings from scientists about the risks of socialising have caused sales to tumble across hospitality and leisure businesses as Britons stay home.

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UKHospitality estimates the sector has lost £4 billion in sales since the government last month began implementing its so-called Plan B measures to tackle Omicron. City centres have been hit hardest, with sales down to a fifth of 2019 levels in central London at several venues in the past week.

Martin Williams, chief executive of Gaucho Restaurants, which had cancellations equivalent to 10,000 diners last week, said Sunak’s new support for the hospitality industry was “too little, too late” and “will only act as a sticking plaster on major challenges for the sector”.

Michael Kill, chief executive of the Night Time Industries Association, a trade body, added: “Every pound of help is much needed - but this package is far too little and borders on the insulting.”

Rocco Forte, chief executive of Rocco Forte Hotels, said the grants on offer by Sunak – of up to £6,000 per site – were “hardly going to make a lot of difference” to luxury hotels.

Scott Hunter, co-founder of The Pig’s Head pub in Clapham, south London, said: “While any support is welcome, £6,000 isn’t going to stop already hard-hit businesses from going under. Restaurants, pubs and bars make a large percentage of their annual profit in December and unless more support is forthcoming this will be the final nail in many businesses coffins.”

Other executives have warned that they could face laying off staff if current levels of trading continue.

Major shift

The £1 billion package announced by Sunak marked a major shift by the chancellor, who had previously insisted sufficient initiatives were in place to support businesses through until the spring. The Treasury has so far provided more than £400 billion to support workers and companies during the coronavirus pandemic.

Hospitality and leisure businesses will be the biggest beneficiaries of the £1bn package, with the one-off £6,000 grants worth up to £683m on a combined basis for an estimated 200,000 companies in England.

Another £100 million of discretionary funding will be made available for councils in England to help companies in other sectors.

The government will also cover the cost of statutory sick pay for Covid-related employee absences at small and medium-sized companies, and provide £30m for a fund supporting culture. The Welsh, Scottish and Northern Ireland administrations will between them receive £154 million to provide equivalent support.

The treasury has not ruled out further financial support for business after Christmas if further Covid restrictions are introduced.

The British Chambers of Commerce said that if there were any tightening of restrictions, “we would need to see a wider support package, equal to the scale of any new measures, put in place”.

Hospitality businesses have been calling for a cut to business rates and an extension of relief on value added tax.

Clive Watson, executive chair of City Pub Group, described current Covid restrictions and government messaging as a “de facto lockdown” due to the impact on sales.

Retailers and gyms were left without specific support in Sunak’s latest package, and will have to apply for grants from local authorities.

The New West End Company, which represents retailers in central London including Oxford Street, said the sector had been “hard hit by a lack of footfall”.

The Treasury acknowledged that pubs and restaurants had experienced mass cancellations due to Omicron, but said companies now had 40 per cent more cash in the bank than at the start of the Covid crisis. – Copyright The Financial Times Limited 2021

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