There are four main things which have kept restaurants from closing en masse in the past 12 months — support systems, which tonight, Friday 26 February, have been highlighted in a letter sent to ministers by a group of high profile central London chefs and restaurateurs. Drafted by St. John’s Trevor Gulliver ahead of Wednesday’s Budget, the letter emphasises the need for chancellor Rishi Sunak to extend business rates relief, the temporary cancellation of a tax attached the value of a restaurant’s property; the cut in the VAT rate from 20 percent to 5 percent; and the furlough scheme, which sees the state pay 80 percent of workers’s wages when they are unable to work as a result of the pandemic. It also stresses the need to find a solution to the rent impasse, although that is outside of Sunak’s purview.
While restaurants now have their “roadmap” for reopening — outdoor dining will return on 12 April, while dining rooms can reopen on 17 May — they have been left hanging on whether or not they are going to get the fuel to power the car needed to get there. “The problem of unfolding a great big map for the first time is remembering how to fold it back up,” Gulliver writes in his letter.
At this point, it seems entirely implausible that Sunak will not extend some or all of the protections because restaurants are closed, their fate taken out of their own hands by the length of lockdown three. But so far, he hasn’t. And more, the extent to which they will be extended will not be known until next Wednesday, 3 March, when Sunak will deliver his speech to the House of Commons at around 12:30 p.m.
“This letter is to remind you amidst all the noise. The funding plans we have been shown are patently of no materiality for the task in hand,” Gulliver writes. “The road map for London Town needs funding, real funding, no prevarication and this budget has to address VAT, business rates, furlough, rent legislation and all the other vital components for businesses as a starter. You have opened the map, it will dismay many and be the death knell for some, so you have to deliver the ammunition for us to make it work.”
It echoes sentiments from restaurant and pub trade bodies who this week have both released statements urging the government to extend those support systems. “The Prime Minister said he will not pull the rug out and do whatever it takes. We will hold both him and the Chancellor to this,” Emma McClarkin, chief executive of the British Beer & Pub Association, said on Monday. “Our sector will need more grant support... as well as furlough extended to save jobs for pubs not able to open in April. Even when they open in May, pubs will need help on their long road to recovery through an extension of the VAT cut and Business Rates relief — as well as a beer duty cut.” The length of time it would take to recover meant that support needed to be extended for 12 to 24 months, she said.
Restaurant trade body, U.K. Hospitality emphasised the need to grant “an extension of the VAT cut and business rates holiday,” which it said “must be confirmed along with a targeted extension of the furlough scheme.”
So before next Wednesday, here’s a reminder of the key things to look out for, the questions that restaurants and their workers hope will be answered so that they can focus on reopening without worrying if they’ll be able to reopen at all.
When are business rates relief and the VAT cut going to expire?
Both the business rates relief and the VAT cut currently expire on 31 March 2021.
As evidenced by the testimony of three very different London restaurant owners, this means a significant amount of cash saving for businesses which have very little of that right now.
Proposed extension: A consensus appears to have now built around March 2022, although December 2021 has also been suggested.
When is the furlough scheme going to end?
The furlough scheme currently ends on 30 April 2021.
Proposed extension: Unclear, though the suggestion coming out of government has been that it will be extended until the summer. It is likely it will be extended for at least three months, to give employers a little flexibility after restaurants are able to reopen indoors (in May.)
Having kept shtum for weeks and then schmoozed with Gordon Ramsay, the pressure is on for Sunak to deliver to restaurants exactly what they need as they embark on what they hope will the last leg of their long pandemic journey.