The Future of Restaurants and Government Coronavirus Policy Are on a Collision Course

Chancellor Rishi Sunak is coming under increasing pressure to guarantee extensions to coronavirus support schemes before businesses have to take terminal decisions, and the latest push is on the furlough scheme. There is a growing expectation that Sunak will extend furlough through summer when he announces his Budget on 3 March, in six weeks.

The scheme, which pays 80 percent of workers’ wages up to £2,500 and asks employers to pay National Insurance contributions and holiday, currently expires at the end of April. It’s the last of the four key pillars of support that are keeping restaurants going to fall: the business rates holiday; VAT cut from 20 percent to five percent; and eviction protections from rent arrears all run out at the end of March. Had the furlough scheme run out on 31 October 2020 as originally planned, 600,000 hospitality jobs would have been unsupported.

The Confederation of British Industry (CBI) has already urged Sunak to extend the rates and VAT measures. Director-general Tony Danker said: “Our Covid-related business support asks are about moving now or soon, rather than waiting until March 3... business support needs to go in parallel with the tiering of restrictions.“

“Sudden stops and cliff edges really don’t help and I don’t think anybody in government believes that we’re going to have a sudden opening up with the economy.”

In many ways, the next few months are the most crucial for Sunak’s management of the coronavirus pandemic, and in turn for the restaurants, pubs, bars, and cafes that will likely live or die on that management. Without advance notice of coming support, whether it be actual money or the ability to defer outgoings, restaurants, pubs, cafes, and bars will have to plan for a future in which they must assume nothing is forthcoming. That means cutting costs; that means laying off staff they can’t afford to keep on furlough; that means, if the numbers don’t add up, closing altogether. With spring/summer heralded as the point at which the vaccine is likely to bring businesses relief, having them needlessly close by delaying support would be both devastating and unnecessary.

It’s unclear whether or not Sunak will act before 3 March. Delaying until the possible becomes inevitable is a hallmark of the government’s coronavirus policy, but Sunak’s waiting should not be confused with Boris Johnson’s pathological aversion to introducing lockdowns until it’s too late. His fears of running up “too much” debt are what slow him; they also translate into the Scotch egg debate and allowing restaurants and pubs to open when public health measures throttle their trade. That aversion to incur more and more debt made some sense when vaccination was hypothetical; it makes much less sense when millions of people are being vaccinated per week and the government is making noises about lifting lockdown in spring. For Britain’s economy to recover, it will need restaurants, pubs, cafes, and bars to be open and trading. They can’t do that if they collapse before they have the chance to get on their feet.