As part of his first budget, the chancellor Rishi Sunak yesterday announced a relief package worth £12 billion to ease pressure on the economy caused by the coronavirus (COVID-19) outbreak. Within that provision, Sunak pledged a 12-month business rate pause aimed to provide relief to small businesses in the likes of retail and hospitality. However, a number of London restaurant owners have said the measures do not go far enough.
As they have pointed out, the government’s £51,000 rateable value threshold means that the vast majority of (central) London restaurants — many of whom are suffering from a dip in tourism and a general disinclination from customers in the city to dine out — will not qualify for this relief. Business rates are a tax applied to commercial property, which is calculated according to an estimate of the rental value of that property on the open market.
Restaurateurs on social media have pointed out that notable sites in central London — such as Berenjak in Soho — command as much £79,000 in rates annually. (The owners of that restaurant neither confirmed nor denied the accuracy of that figure.) Many operators in London are calling for the government to provide reassurance that charges such as rates, VAT, and PAYE will be put on “moratorium” to help ease the pressure. But so far policy makers have not indicated they will heed this call.
Hus Vedat, chef-owner of Barboun in Shoreditch told Eater that the measures do “nothing for the small/medium-sized businesses in the hospitality industry, who are at major risk due to the lack of footfall and cancelled travel and leisure plans due to the coronavirus.”
“For this to even have a small positive impact the policy should be extended to all hospitality businesses for the rest of the year,” Vedat suggested. “Or at a minimum to include small to medium sized property, extend the threshold to at least £150,000 rateable value, so that it can help the inner cities where rent and rates are extortionate.”
Vedat warned that “if restaurants start to go out of business — then this will have a serious knock on effect — with suppliers and producers also being heavily impacted,” adding that if nothing more is done by the government, “[then] there will be no impact. Just words. The hospitality industry is on its knees and instead of the government offering a helping hand to get back on its feet. With this budget they are offering us a finger and it’s not good enough.”
Jyotin Sethi, CEO at JKS Restaurants said that the rate relief “does help two of our smaller sites but the rest of our group sees no benefit. Most larger groups, who pay the large majority of the overall business rates bill, won’t see any benefit from the rate relief.”
In terms of what else might be done — at a policy level, even temporarily, Sethi said that the most obvious other measure is for the government to offer payment plans and/or a temporary reduction on VAT and to defer or offer payment plans for tax owed on employee wages (through PAYE.)
He summarised the situation thus: “[The] impact on restaurant sector is huge; a number won’t survive the next few weeks / months.”
Elsewhere, UK Hospitality, the trade body representing restaurants and bars across the country, also cautioned that many of the hardest-hit businesses will not benefit.
“While easing business rates burdens ... may give smaller hospitality businesses some breathing room, it’s vital to recognise larger operators, and the huge number they support, but which have today been utterly ignored at a time of business crisis.
“The perverse nature of the current system is underlined by the ongoing coronavirus situation, with punishing payments still expected of companies whose venues may not be able to open or operate.”