Sector faces ‘shuddering halt’ and will need financial help

By Gary Lloyd contact

- Last updated on GMT

Fears for future: the warning letter to the Government states businesses could be crippled by Plan B (credit: Getty/itsarasak thithuekthak
Fears for future: the warning letter to the Government states businesses could be crippled by Plan B (credit: Getty/itsarasak thithuekthak

Related tags: Legislation, Pubco + head office, Multi-site pub operators, Health and safety, Finance, Tenanted + leased

Plan B will bring the hospitality sector to a “shuddering halt” and financial support will be needed again, according to sector chiefs who have penned a warning letter to the Government.

The missive, signed by the bosses of more than 100 hospitality and leisure businesses, has been co-ordinated by UKHospitality. The trade body said the signatories represent about 15,000 venues and 300,000-plus employees directly.

The letter, titled Maintaining the recovery of the hospitality sector​, explained pubs and other businesses has reported Christmas bookings were already down on expected levels before the emergence of the new variant Omicron and have fallen further.

Bookings lower than expected

“The announcement of Plan B this week will bring the hospitality sector’s recovery to a shuddering halt, at such a critical trading period for our businesses. Coming into December, prior to the emergence of the new variant, Christmas bookings were 9% lower than expectations. The week after the announcement saw sales drop around 12% – with future Christmas bookings also down 12%. With each Government announcement consumers are becoming more risk averse,” the letter read.

“In a subsequent member survey, we also asked businesses what impact the introduction of the Government’s ‘Plan B’ would be. Respondents reported an average anticipated decline of 28%. With a significant increase in costs, the sector is being pushed beyond the point of viability.

“Anecdotal evidence suggests recovery will be severely dented and could be pushed back by three to six months and investment is being held back, both in communities and through the undermining of investor confidence in the sector as a whole. As it stands, we will not start to recover until the second quarter of 2022, just at the time when a whole raft of new costs hit the sector.”

The letter, which has been signed by pub companies such as Fuller’s, Nightcap, Revolution Bars, Shepherd Neame and Stonegate, also stated the Government’s approach of no face coverings for the majority of the sector and only limited application of Covid passes at this stage was appreciated but “a dip in consumer sentiment hits our sector the hardest and earliest as a discretionary activity”. It also said its high standards of compliance with protective measures has been reflected by less than 2% of covid infections being traced to hospitality venues.

Support needed again

It continued: “Considering the measures we have taken and the financial hit we will take from these restrictions, we believe Government needs to step in and provide support again. We have worked extensively with BEIS on a recovery strategy that highlighted the huge cost pressures businesses are facing – from labour to energy price rises to insurance costs and more – as well as acute labour shortages that have continue to inhibit our trading.

“To ensure businesses can survive the first quarter of 2022 and to ensure we can contribute towards the nation’s economic recovery, the Government must prolong the reduced rate of VAT until at least the end of 2022 – ahead of a review into a permanent reduction; suspend business rates for the first quarter of 2022 for all hospitality businesses and agree to review the 2022-23 cap; and introduce new grants to compensate for a lack of trade from Government intervention – in line with the “open” business grants in autumn 2020 – this could include unspent ‘additional restrictions grants’.”

Bosses said there is concern for jobs in the sector because there is no furlough scheme in place with a traditionally weaker trading period of January and February to follow “could be terminal for thousands of businesses that have never before considered themselves unviable”.

It also urged the Government to make it clear to the public they can continue to visit their local pubs this Christmas to spend quality time with friends and family.

Related topics: Legislation

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