£1bn fund for hospitality like ‘sticking an Elastoplast over a gaping wound’

By Amelie Maurice-Jones contact

- Last updated on GMT

Too little too late: Operators react to the Chancellor's announcement of hospitality grants (Getty/ axel bernstorff)
Too little too late: Operators react to the Chancellor's announcement of hospitality grants (Getty/ axel bernstorff)

Related tags: Finance, Government, Property, Coronavirus, Rishi Sunak

The Chancellor’s announcement of a £1bn fund for hospitality venues has come under fire from operators, who claim the support does not come close to recovering lost trade.

Hospitality operators will be able to apply for cash grants of up to £6,000 per premises, revealed Rishi Sunak in a statement yesterday (21 December).

The amount of money which will be paid to each venue is varied by the rateable value (RV) of each eligible premises, in three bands: £0 to 15,000, £15,000 to £51,000 and over £51,000. Respectively, the value of grant available in each band is £2,700, £4,000 and £6,000.

This comes after many venues were hit by reduced footfall and a collapse in bookings due to customers’ anxiety about the fast-spreading Omicron Covid variant.

Owner of Suffolk-based pub the Unruly Pig Brendan Padfield said: “Sticking an Elastoplast over a gaping wound will not stop our industry bleeding to death. Disappointment with the Chancellor ‘s statement is an understatement. I do not want to sound ungrateful but £6k and the possibility of a grant will not touch the sides.

“Sticking an Elastoplast over a gaping wound will not stop our industry bleeding to death"

“This crisis of customer confidence is of the Government’s own making and borne of their indecision, dithering and, I am sad to say, their diffidence. Lockdown would be better than this as real help (that would make a meaningful difference) would then surely follow in the form of furlough. Instead, Boris is letting hospitality bear the brunt for his political impotence. This is just limbo.”

Further support desperately needed

Padfield said action on business rates and on extending the VAT holiday was “desperately needed”. He said: “Hospitality has had to close for 10 months and then battle through restrictions, and yet again is now being battered by another storm.

“It feels like a war of attrition where hospitality is doing too much of the fighting on the front line.”

It's  “a twinkle of sunshine in a very bleak outlook”

The Chancellor called the new support “generous”. He also committed to topping up discretionary grant funding, released a £1.5bn package to support the supply chain and asked landlords to show patience with struggling hospitality tenants.

Licensee of the Dog at Wingham in Kent Marc Bridgen said the £6,000 grant was “a twinkle of sunshine in a very bleak outlook”.

He added: “The bigger picture is what seems to be unfixable; the rate at which coronavirus is tearing through society, the effect it's having on our bookings.

“Does £6,000 cover a 20% shortfall? No. Where my salary staff are having to miss days, I'm paying them in full and, if it keeps continuing to be as difficult as it is, then a lockdown with furlough will be better than the businesses trying to plug the holes themselves.”

Rob Barr, owner of Barr & Barry’s Hospitality said he hoped the Government support would continue if further restrictions were imposed which has been seen with the devolved administrations which will further dampen New Year’s spirits.

Uncertainty causes damage

Rekom UK chief executive Peter Marks said while the £1bn fund would help many in the hospitality sector, it is well short for those with larger premises where the costs are far greater.

“For us, we have already lost most of our profit in one of our busiest months, which could in turn prove disastrous if we end up having to close New Year’s Eve, our biggest night of the year and 10% of our annual profit,” said Marks.

He continued: “As a nightclub operator we have had the worst of times, as a large nightclub operator with multiple sites, we have on a pro-rata basis been the worst supported. So, whilst many will cheer this move for us it is such a small amount given our overheads as to make the difference".

Keith Bott, Titanic Brewery’s managing director, said while the company was pleased Omicron’s impact on hospitality had been recognised by Government, the financial help did not come close to recovering the loss in trade.

“All we would ask is that this support finds its way to the intended destination quickly and efficiently,” said Bott. “Continued uncertainty over restrictions means we are unable to plan production and causes further damage”.

Call for continued support

British Institute of Innkeeping chief executive Steven Alton said Chancellor’s support was “hugely welcomed” by members running UK pubs, who are now struggling to pay bills due to reduced trade levels, with most building over £50,000 of pandemic specific debts.

While cash flow was critical to the short-term survival of these venues, operators would still need ongoing support with business rates and an extended period of low VAT due to lost trade over Christmas, according to Alton.

For the Campaign for Real Ale’s national chairman Nik Antona, while grants were a “step in the right direction”, the support comes too late, and would not help pubs that have already closed their doors due to cancellations and a drop in trade.

Antona continued: “In addition to getting these grants paid to licensees as quickly as possible, it is vital that local councils in England use their discretionary funding to support breweries, cider producers and other businesses in the supply chain who have also been affected. 

“Businesses still desperately need certainty on what might happen next. If further restrictions are going to be imposed there needs to be enough time for pubs and breweries to plan and prepare. 

“In the face of any restrictions on trading, the sector will also need a comprehensive support package over and above what has been announced today, including further employment support through furlough, rent support and business rate relief to support and safeguard our locals.”

Vital lifeline

On the other hand, chief executive of UKHospitality Kate Nicholls considered the support “generous” in addition to a commitment from ministers to prioritise hospitality and its supply chain in allocation of funds.

British Beer & Pub Association chief executive Emma McClarkin said the support package would be a “vital lifeline” for many pubs and brewers and would help compensate companies for the dramatically reduced trade experienced during the run up to Christmas. 

McClarkin added: “It will be absolutely essential the Government continues to monitor and support our sector for the long-term as we ride out the pandemic and into recovery.

“Ensuring our pubs and brewers continue to have the support they need, including further financial support if further restrictions are introduced, along with a clear timeline for the lifting any such measures. Our overwhelming hope is to remain trading and serving our customers and communities."

According to Richard Harrow, the British Frozen Food Federation’s chief executive, it looked like the Government has ignored ‘the squeezed middle’ of the food industry – the companies that sit between agriculture and the hospitality and foodservice market.

He said: “Many of our members supplying hospitality, who have only just got back on their feet, have seen orders collapse by 30%, leaving them with thousands of pounds of festive stock they will be unable to sell.”

Related topics: Legislation

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