Government must 'act decisively' with financial support

By Emily Hawkins contact

- Last updated on GMT

Support needed: Marston's CEO was among some 120 hospitality bosses to back a letter to Prime Minister Boris Johnson
Support needed: Marston's CEO was among some 120 hospitality bosses to back a letter to Prime Minister Boris Johnson

Related tags: Coronavirus

More than 100 hospitality industry leaders have written to the Prime Minister backing a support and investment package to rejuvenate the pub and restaurant sectors in the wake of the coronavirus crisis.

Organised by trade body UKHospitality, the letter asks the Government to adopt a series of measures including the deferral of all tax liabilities for July, a VAT cut for tourism services and extending the business rates holiday until March 2022.

Other measures suggested were a targeted ‘bounceback’ grant to cover a proportion of rent debt during closure, reopening and recovery for businesses stuck in rent stalemates and allowing access to full furlough for an extended period to protect jobs.

Signatories of the letter include the chief executives of Greene King, JD Wetherspoon, Marstons, Punch Pubs and The Deltic Group.

Urged to act

The letter highlights that hospitality was the first and hardest hit sector of the Covid-19 pandemic and faces the longest recovery period, with sales across the sector expected to be 56% lower than last year.

UKHospitality chief executive Kate Nicholls said: “If we want to make a real success of this reopening, keep businesses alive and jobs secure, then the Government needs to provide support. Support from the Government has been extremely helpful in keeping venues afloat and it has saved jobs. 

“There is no possibility of stopping now, though. Anything less than a full show of support from the Government risks undoing much of the good work that has already been done and will cause lasting damage to employment and the UK economy.

“We urge the Government to act decisively and positively to give hospitality the best possible chance of not only surviving the crisis but thriving in the aftermath.”

The letter can be read in full here:

Government support for the restart, recovery and revival of hospitality in the UK

Dear Prime Minister,

Last week’s announcements about the reopening of much of the hospitality sector and the changes to social distancing measures are warmly welcomed and we will work hard to put in place all the important safeguarding measures when many of us look to re-open our doors from 4 July. We will continue to work with you on the steps needed to reopen the parts of the sector which remain subject to restrictions and the support that they will need throughout prolonged closure.

The Covid-19 pandemic has created widespread devastation for the hospitality and tourism sector:

• We were first to be hit, with revenues -21% directly as a result of the virus before lockdown.

• We were hardest hit, accounting for a third of the slump in GDP in April and March and ONS data showing a fall in employment and economic activity of 90% during lockdown.

• We will be hit for the longest with demand suppressed from foreign travel, restrictions on business events and a delayed return to office working as well social distancing.

• Sales across the sector are expected to be 56% lower than last year, reducing revenues by £73.4bn and half of businesses do not expect to reach breakeven until the end of next year.

Hospitality businesses operate with very high fixed costs and labour costs are the only flexible point to absorb this suppressed demand. Many parts of the late night and leisure economy as well as activities such as events and conferencing in our hotels have no provisional date for reopening and this is impacting confidence and undermining job security.

With an ambitious programme of Government support, alongside industry innovation and dynamism, we are confident we can return to full strength and still operate safely and responsibly. In doing so we can play our full and active part in levelling up skills, supporting the young people who make up over half of our workforce and sustaining inward investment to our towns, high streets and coastal communities. It will allow us to restart and begin to recover in 2020, with the sector not back to strength before 2021 when it can start its revival.

UKHospitality has developed a targeted set of recommendations to help the industry build back over the coming months and smooth out cost increases which could undermine the road back to work:

Restart

• Secure a successful restart by automatically extending the deferral of all tax liabilities that will now fall due in July – such as PAYE – covering the closure and reopening period in full and remove the obligation to pay interest on late payment.

• Unlock the impasse in the commercial property market which is threatening high street viability by incentivising the use of the recently published Code of Practice with a targeted Hospitality, Leisure and Retail Property Bounceback Grant to cover a proportion of rent debt during closure, reopening and recovery.

Recover

  • Boost confidence, demand and incentivise spend by temporarily reducing VAT to 5% for tourism services – holiday accommodation, eating and drinking out and tourist attractions to bring more people back into work and boost investment in training and income.
  • Protect jobs, particularly for young people, by providing a route to fund a return to part time work as demand ramps up by allowing access to full furlough for longer for hospitality businesses subjected to extended closure and double the employer NIC threshold to protect a return to part time work, particularly for young people resuming apprenticeships and training.

Revive

  • Secure Hospitality’s Recovery by extending the hospitality business rates holiday to March 2022 pending root and branch reform and, during that breathing space, reset the regulatory framework governing commercial property, planning and business tax.

The sector’s record of job creation following a crisis is phenomenal. In the decade that followed the financial crisis hospitality consistently created around one in six new jobs thanks in part to the VAT cuts and investment in youth employment and training introduced in the immediate aftermath. We can do so again. Physical hospitality cannot be replicated digitally online, in the same way that some form of retail can be. We therefore urge you and your colleagues across Government to work with us to stimulate demand and support the sector’s recovery.

This suite of measures will help give our sector the best chance of a sustainable recovery and enable us, once again, to support the economic growth and national wellbeing of this country. We thank you in anticipation and look forward to your response.

Related topics: Legislation, Rebuilding the Pub Sector

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