A new survey conducted by the principal trade bodies for hospitality and pubs concludes that unless businesses are granted further government support, a “catastrophic” scenario of mass redundancies and permanent closures will be inevitable this winter.
UK Hospitality, the British Institute of Innkeeping, and the British Beer & Pub Association, warned that up to 750,000 jobs could be lost, having found that 76 percent of surveyed businesses were currently “loss-making.”
The survey comes after a new tier system was introduced last week, with London placed into tier 2 (“high risk”) coronavirus restrictions on Saturday 17 October. This means that different households are unable to dine together inside restaurants in the capital. On top of the rule of six and 10 p.m. curfew introduced last month, these new restrictions are hampering the ability of hospitality businesses to recover from the multifarious effects of the pandemic.
The trade bodies added a concerning caveat to the survey’s findings: “Worryingly, the grave outlook...reflects views largely canvassed before the full impacts of the tier system were announced, and so are likely to be an under-estimation of the acute difficulties of the sector’s immediate prospects.”
What the survey found:
With the Coronavirus Job Retention Scheme (CJRS) scheduled to come to a close at the end of October, and the new Job Support Scheme (JSS), which comes in from 1 November, “not viable for most hospitality businesses that have seen their cash flows decimated since restrictions have increased,” according to the trade bodies, the survey found that by February 2021, over 750,000 jobs will be lost.
Among its other findings, were:
- Nearly 50 percent of respondents believe that the restrictions in place will reduce their turnover by at least half this winter.
- The prediction for total business failure by the end of 2020 is now estimated to be more than one in four.
- Over 50 percent of businesses are now expected to fail before the end of March 2021.
The trade bodies say that businesses in areas like London “are in no man’s land,” since they will soon be without the benefit of furlough and government disruption grants (available for those in tier 3 areas) but remain under pressure to stay open and trade with “an impossibly low level of custom.” It is this which will force them to make large sections of their staff redundant and to close their doors, potentially permanently, the organisations have warned.
What the trade bodies say must happen:
- An immediate, sector-specific extension of the JSS, which does not include employer contributions until after restrictions on hospitality businesses are lifted. (Currently, an employee must work 33 percent of hours for that job to be deemed viable and therefore eligible for support. In that scenario, the employee would receive 77 percent of wages, with employers obliged to contribute 55 percent — the hours worked, plus half of those not worked — and the government topping up the remaining 22 percent, the other half of hours not worked.) See graphic below.
- Government’s Local Restrictions Support Grants should be made available for all venues, across all tiers. (Currently only in place for those in tier 3 areas.)
- A review of any restrictions placed on venues must take place at least every two weeks. (It is currently under review every 28 days.)
The trade bodies say that to ensure a sustainable recovery in 2021, “safeguarding hospitality venues against business failure is the priority,” with a joint spokesperson adding: “There can be no doubt of the devastating impact that the Government’s restrictions are having on hospitality and pub businesses across the U.K.
“Without urgent sector-specific support for our industry, massive business failure is imminent and hundreds of thousands of jobs will be lost around Christmas...While there are any restrictions placed on hospitality and pubs, there must be financial support in place across all tiers of risk.”