Data from insolvency firm Red Flag Alert has predicted that a blanket tier three across the north of the country would mean the end for 22% of the region’s bars and restaurants.
The Liverpool City Region was the first area to be placed in the ‘very high risk’ tier followed by Lancashire. The Government wants to place Greater Manchester into the same tier but the city’s leaders are currently fighting back with calls for further financial aid for businesses.
Red Flag Alert data showed at the end of June 2020, the number of northern England's bars and restaurants in “significant financial distress” had grown by 4.5% since the national lockdown in March.
There are firms with county court judgements filed against them for missed payments or are showing a consistent deterioration in financial performance.
Red Flag Alert managing director Mark Halstead said: “Unfortunately, the new local furlough scheme and cash grants will not be enough for many of the struggling bars and restaurants in the north of England to survive a tier three lockdown.
“They simply don’t have the cashflow and financial health to sustain closing their doors again so soon after the easing of the national lockdown."
Halstead added: “Many of these bars and restaurants are operating on the breadline and the highest level of the new lockdown system will prove the final nail in the coffin.
“There’s then the concern of how their insolvencies will impact the rest of the supply chain they owe money to.
“Closing bars and restaurants runs much deeper than the economic woe affecting the premises you see on the high streets.
“It will end up costing suppliers tens of millions of pounds in write-offs over the coming months, which risks jobs and livelihoods nationwide.”
Forbes Solicitors head of corporate and insolvency specialist Pauline Rigby warned concerns about tier three restrictions go way beyond the immediate impact on bar and restaurant owners.
“We are looking at entire supply chains at risk across the regions, along with the knock-on effect it has one consumer confidence," she said.
“Companies that rely on trading with these venues also face losing significant amounts of revenue overnight and the risk of outstanding payments for goods and services already supplied going unpaid.
“They are facing a significant ripple effect of debt and are understandably looking to protect themselves and their employees against this.”
However, real estate adviser Altus Group has found Greater Manchester pubs and bars would be eligible for just £3.7m in cash grants, if they were forced to close as part of the tier three restrictions.
Firms will receive up to £3,000 a month as part of the Local Restrictions Support Grant Scheme and be eligible for payment after two weeks of closure, if they are legally required to close due to a nationally imposed local lockdown.
Pubs and bars with a rateable value of £15,000 or under will get grants of £1,334 a month while those with a rateable value of more than £15,000 and less than £51,000 will receive grants of £2,000 a month. The venues with a rateable value of £51,000 and over will get grants of £3,000 a month.
Analysis by Altus Group found 1,809 pubs and 143 wine bars across Greater Manchester are at risk of closure unless they can operate as restaurants ‘serving substantial meals if tier three restrictions are imposed.
Just £3,738,544 of grant support will be available for each month of the enforced closure across the region’s 10 council areas.