Rent debt remains ‘biggest gap’ in hospitality support

Revealing his plans to address the UK economy’s largest contraction in more than 300 years, Chancellor of the Exchequer Rishi Sunak outlined a number of measures to help pub and bar operators continue to weather the ongoing pandemic – including extensions to the 5% VAT rate, business rates holiday and alcohol duty freeze.​

However, despite broadly welcoming support measures outlined by the Chancellor for ailing hospitality businesses, UKHospitality chief executive Kate Nicholls explained that the failure to address sector rent debt remained the “biggest gap in support”.  

“We need the Government to announce an extension of the moratoria at the earliest opportunity and work with industry to establish a landing zone to resolve this £2bn millstone around our recovery,” she explained.

As reported by ​The Morning Advertiser (MA)​,​ a campaign for a three-month extension to the eviction ban from 31 March and a two-year period for businesses to pay half the back-rent owed, was launched just days before the Budget.

What’s more, speaking to The MA’s​ sister title Big Hospitality​ in January, Loungers chairman and co-founder, Alex Reilley, warned that the end of the lease forfeiture and debt enforcement moratoria in March could leave thousands of businesses “horrifically exposed”.​

‘Meagre’ support 

The Chancellor’s statement came after Sunak was said to have vastly under-estimated rent costs faced by pubs, according to operators who say the Government has not listened to the trade.

Speaking on the BBC’s Andrew Marr Show​ on 28 February, Sunak was asked to respond to claims that the latest lockdown grants of up to £18,000​ for pubs were “meagre”. 

“Well, if you think about a typical restaurant or pub, they would have rent on an average year of somewhere between £14,000 to £20,000 – I mean it will vary substantially,” he said.

However, data from trade body UKHospitality recorded average rent of £35,000 – with one in five having rent over £50,000.

The exchange came just over a week after the Chancellor was blasted for being “out of touch” for kicking off his ‘In Conversation’ series – designed to gauge the impact of Covid-19 on the hospitality sector – with celebrity chef and media personality Gordon Ramsay​.

The UK recently avoided a double dip recession​​ after registering 1% growth in the final quarter of the year, 2020 saw the biggest annual drop in GDP (9.9%) since the Great Frost of 1709 when the economy shrank by 13%. 

This saw food and beverage service output from venues such as pubs almost halved (48%) while alcoholic drink manufacturing fell by a third (33.9%) according to the Office for National Statistics.