Restaurants’ biggest fixed cost and biggest worry is almost always rent. But the next biggest is almost always staffing, and with the Coronavirus Job Retention Scheme (CJRS) expiring at the end of October, industry figures have joined Labour in pressuring the government to provide a targeted extension for hospitality businesses. The fear is that without it, hundreds of thousands will find themselves unemployed.
U.K. Hospitality chief executive Kate Nicholls told the House of Lords Economic Affairs Committee (HoLEAC) yesterday, 15 September, that 900,000 jobs were at risk without an extension to the furlough scheme that “helps businesses retain valuable workers.” The thrust of the proposals is the providing of various levels of financial and administrative support, according to the situations in which businesses find themselves. Restaurants that have reopened might see part-funded, small-scale furlough payments; restaurants subject to local lockdowns might receive an “allowance” for staff costs and rent.
The plans echo Labour’s proposals, which would also provided targeted support for “badly-hit sectors.” Statistics released by the Office of National Statistics (ONS) in August showed that hospitality was hit hardest by lockdown. Food and drinks businesses, a large section of which were completely closed between March and 4 July, registered a decline of 83.4 percent in the three months to June after they were forced to shut down. Nicholls told the HoLEAC that, despite furlough support, 100,000 hospitality workers had lost their jobs to date, largely as a result of large restaurant chains striking rescue deals on the condition of closing large numbers of restaurants.
With the government having now confirmed an extension of the lease forfeiture moratorium to the end of 2020, restaurants have some breathing room on rent payments. But that extension doesn’t change their ultimate debts to their landlords, who are still able to demand full rent when that moratorium ends. The problem that the government has, both with the furlough scheme and with rent, is that in taking a one-size fits all, blanket position, it has inadvertently created conditions for disparity — some restaurants have paid full rent, some have paid none; some have reinstated all their workers; some have not reopened at all; but they are all subject to the same regulations. One solution that is to just keep extending the blanket policy, as it has done with rents.
Chancellor Rishi Sunak has always been saying, however, that neither policy can be infinite. Whenever that infinity becomes finite, those disparities are going to turn into starker ones: the restaurants that can stay open, and the restaurants that are forced to close. Both U.K. Hospitality and the Labour Party suggest that this can be avoided; time will tell if the government agrees.