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Hospitality Industry Says Government Needs to Do More to Avoid Insolvency Catastrophe

Trade body UK Hospitality finds that over 75 percent of hospitality businesses are at risk of insolvency in the next year

Frith Street in Soho, pedestrianised after lockdown lifting measures Michaël Protin/Eater London

Trade body UK Hospitality has issued new calls for the government to provide “decisive support” to restaurants, pubs, and bars after a new survey found that over 75 percent of hospitality businesses in the U.K. risk being unable to pay their bills within 12 months, as a result of the COVID-19 pandemic.

The survey, carried out by UK Hospitality in partnership with data analysts CGA, found that as many as 20 percent of businesses are at “significant risk” of insolvency or “expect” insolvency within the next year. More than half of businesses believe there is a “slight risk”, while fewer than 25 percent of those surveyed were found to be facing no risk. The findings are drawn from the responses of 128 businesses with a combined total of nearly 12,000 outlets.

Based on the results, UK Hospitality has renewed its plea for further intervention from the government. otherwise, it says, “many businesses will face ruin, with hundreds of thousands of jobs at risk.”

While the focus for so much of the lockdown period was aimed at reopening, the trade body remained sanguine about the impact of the pandemic and the extended period of closure for businesses in the long-term. Since April, UK Hospitality has reminded the government of the need to provide wide-ranging, long-term support for restaurants.

A month after reopening in London, amid the flurry of enthusiasm that has greeted the government’s Eat Out to Help Out campaign this week, the findings present a sobering reminder of the difficult path many restaurants face this year and into the future.

UK Hospitality chief executive Kate Nicholls said today that the new figures “underline the scale of the impact of COVID-19 on [hospitality] and paint a truly stark picture of its immediate future.”

In specific reference to the 20 percent facing serious risk of insolvency or are now expecting it to happen, Nicholls said: “This is a truly desperate position to be in.” She added that for an industry which before the pandemic employed three million people all over the country, it had “never looked shakier.”

Nicholls said it was crucial that government support must evolve now that it has ensured many businesses have survived the initial shock of closure. She also commended measures that had “stimulated a return of some demand” but said that “without further support...we are going to see more and more venues going out of business and people continue to lose jobs.”

Eater understands that UK Hospitality will outline a new proposal to the government later this week, with specific suggestions on how the government may finally intervene on rent — still chief among the issues faced by businesses attempting to recover from the pandemic. It is thought it will build on suggestions issued in June.

Before that, Nicholls said that the the government must do four things: extend the business rates holiday (beyond next March); extend the VAT cut (which is due to expire in January); introduce employment support for businesses still unable to reopen (meaning some form of furlough scheme extension or sector-specific adaptation,); and provide what she referred to as “financial support on rent.” If the government doesn’t act, “we are going to see businesses fail and jobs lost just as the economy begins to reopen,” Nicholls concluded.