Restriction easing delay 'to cost pubs £400m'

Last night (Monday 14 June), the Prime Minister announced the delay in a Downing Street press conference​, stating the Delta variant posed too much of a risk to move to the fourth step of the Government's roadmap.

The British Beer & Pub Association (BBPA) is now calling for full reopening to go ahead next month and has raised concerns about a lost summer for the industry as confidence could deteriorate and see bookings cancelled.

BBPA chief executive Emma McClarkin said: “Delaying the removal of Covid restrictions by four weeks is incredibly hard for our sector to stomach.

“The delay will cost our pubs £400m for this period alone, but inevitably much more as confidence deteriorates and as a key part of the summer season is lost that is so critical to our sectors viability.  Each week of the delay will cost pubs £100m.

“Pubs and licensees are struggling to recover with the current restrictions they face and debts are accumulating. Every week the current restrictions stay and uncertainty continues, the likelihood of pubs being lost forever increases.”

She went on to call for an extended package of help for the trade, including extensions to schemes currently in place.

McClarkin added: “A full package of Government support is now critical for our sector until it is guaranteed to open fully without any restrictions.

“Our pubs require as a minimum an immediate three month extension to the business rates holiday, the ability to defer loan payments due now and a further extension of VAT support. Grants for businesses particularly affected, such as those pubs who cannot still reopen because of the current restrictions, must now also be put in place.”

UKHospitality (UKH) echoed McClarkin’s comments around financial aid for the sector and urged the Government to provide details on how it will safeguard the future of thousands of venues and hundreds of thousands of jobs.

Hugely disappointing

UKH chief executive Kate Nicholls said: “The decision to delay is hugely disappointing but the Government has judged the evidence and acted as it sees fit. It does, however, jeopardise the return on investment that the Government has afforded hospitality and it’s crucial that further support is announced to push us over the line.

“The hospitality sector has already lost more than £87bn in sales in the pandemic leaving businesses deeply in debt and at risk of suffering ‘economic long Covid’ without further support.

“Our businesses face incredible levels of debt and will now face a huge cost hike, with business rates payments set to recommence and rent accruals due at the end of the month.

“An swift indication that the business rates holiday will be extended would go a long way to bringing succour to a battered sector - paying any amount of tax while still unable to trade viably would save businesses and, in turn, tax receipts in longer term.”

She estimated the delay will cost the sector £3bn in sales, put 300,000 jobs at risk and stated if support was not sustained and adjusted, businesses will fail and getting this far will count for nothing.

Nicholls added: “A final lifting of restrictions is the only way to save the sector from disaster and enable it to play its part in a national economic recovery, to support the Government’s Jobs Plan, delivering jobs, growth and investment at pace and across all the regions.

“A single ray of light is that the limit on weddings will be lifted but support must be granted and, crucially, delivered, to the vast majority of other hospitality businesses.

“Not least, it must reach those who are still unable to trade at all, including  nightclubs and those who still cannot operate their main income streams, such as soft play centres, as well as businesses such as contract catering, who operate from other businesses venues and so have been unable to access many reliefs and grants.

“Businesses need a swift, publicly-stated commitment that such support will be in place in the event of any delays, giving them much-needed reassurance after more than 15 months of closure and severely disrupted trading.

“Hospitality is desperate to get back to what it does best and can play a key role in the economic recovery of the UK - but only once it is given permission to trade freely. The Prime Minister asked for one more heave to get us out of restrictions – hospitality, too, requires one last heave, to be able to drive recovery.”

The extension of restrictions was labelled a “devastating blow” by the British Institute of Innkeeping (BII), which is also calling for far-reaching support measures to continue.

Break uncertainty cycle

BII boss Steven Alton said: “Pubs at the heart of their communities are built on the resilience provided by the summer months, boosted by sporting events, large scale family celebrations and being an essential part of the UK tourism offer. Put simply, every day of critical summer trading lost, is a step closer to business failure.

“While many outside of the hospitality sector may perceive this delay as being a small price to pay, for pubs, with 16 months of severe disruption and closure behind them, any further delay requires further and immediate support.”

Alton went on to say short-term support must be urgently extended in a bid to help minimise the impact of restrictions.

“The pressure of the debts that have mounted over the course of the pandemic is now meeting significant costs coming back on line for businesses head on, creating a perfect storm,” he added.

“Even without the delay, we know that the recovery for our sector will be prolonged over many years, with pandemic specific debts per site averaging between £40,000 and £80,000. There needs to be a long-term plan in place to provide these vital community spaces with the opportunity to rebuild their livelihoods, whilst supporting local employment and contributing to the UK’s overall economic recovery.

“We have seen the pent-up demand from customers desperate to return to their normal lives, but this delay and ongoing uncertainty will have far reaching consequences for every area of the hospitality sector, affecting the confidence of consumers, potential employees uncertain on the stability of jobs and essential investment in our viable businesses.

“The Government must now break this perpetual cycle of uncertainty. They must now provide urgent clarity on how this further delay will enable our members to fully reopen their businesses as soon as possible. Critical to the recovery of our sector is the ability to simply trade free of restrictions and be able to plan for the future.”

With nightclubs now unable to reopen this month, late-night business trade body the Night-Time Industries Association (NTIA) CEO described the delay as a “devastating blow for industries hit hardest by the pandemic”.

He added: “The Prime Minister has ‘switched the lights off’ for an entire sector. Many businesses have not survived this pandemic and others are on a financial cliff-edge, unable to operate viably.

"Hundreds of thousands of jobs have already been lost, a huge pool of creative talent has been swept away, and we have been left to suffer extreme financial hardship.

“This delay will drive confidence in the sector to a new low, culminating in more of our workforce being forced to leave the industry, and customers, who have been starved of social engagement, attending illegal unregulated events in place of businesses that are well-operated, licensed and regulated.

“These businesses are overburdened with debt and so any decision to delay the full reopening of our sector must be paired with a robust financial support package, including additional restriction grants, exclusion from furlough contributions, extension of loan repayment holiday for Coronavirus Business Interruption Loan Scheme/Bounce Back Scheme as well as business rates and VAT relief for the next 12 months, not forgetting the £2.6bn in commercial rent debt left unresolved.

Kill outlined how the Government must understand the human impact of the decision to delay ‘freedom day’, not just the public health challenges but those within the sector.

He said: “This is particularly important given the overwhelming confidence in the vaccination rollout, and the ability for our sector to deliver Covid-safe and regulated environments.

“Distressed industries cannot continue to be held in limbo, with thousands of businesses left to fall. This delay, which again offers no clarity on when businesses can open, is leaving many in the industry angry and frustrated, alongside other businesses who have been locked down or restricted from opening through no fault of their own, and at their own cost.”