A group of Soho business owners, including restaurateur John Devitt, of standout Japanese restaurant Koya, have written to prime minister Boris Johnson, the chancellor, business secretary, and Westminster MP Nickie Aiken, outlining how the government can avoid mass closures and further redundancies across the hospitality industry.
The letter, first reported by the Evening Standard and shared with Eater London, has since been made public, with the aim of encouraging the government to act before it’s too late — concluding, “Soho is a precious attraction to the UK in these Post Brexit times, Soho needs to be the finest example to the first response from Covid-19 [...] Please don’t drop the baton now…”
The letter, which comes from a group influential in securing last year’s outdoor dining scheme, makes plain that as the government support measures — furlough, eviction protections, VAT cut, and business rates holiday — are due to come to an end, the industry’s costs will come thick and fast: In addition to the return of the costs associated with the expiration of those relief measures, businesses will also be expected to commence repaying (interest on) the Coronavirus Business Interruption Loans (CBILs), from as soon as April (depending on when the loan was secured in 2020; repayments are scheduled to begin 12 months from it being authorised.)
The case is predicated on the fact that Soho is not only “iconic worldwide” and culturally significant in the capital, but also for its contributions to the national economy: It is, the letter points out, “the second largest employer per square mile in the U.K. after the City of London.” While that comprises a number of retail, media, music, and film firms, there are a great number of restaurants, pubs, and cafes in the area.
It anticipates, based on the most recent communications and leaks from the government, that the reopening of dining rooms will not take place before the end of March, and possibly as late as May, which looks increasingly like the most realistic time-frame. Even then, restaurant owners are expecting to trade at reduced capacity, with social distancing measures in place throughout the summer months.
Because of this unexpectedly longer period of closure, the letter argues that extra support must be introduced, while existing measures ought be extended. “When the Government support programs were considered, it was assumed that this pandemic would be well behind us as we enter spring 2021. This is not the case. The extended lockdowns mean we should have extended Vat cuts, business rates holidays and further grants to support the hospitality industry,” it states.
The case for an extension to the VAT cut — from 20 to five percent (on food) — is a case that has been made by many in in the industry. The government has said is not yet willing to countenance such an extension, but that could of course change. The rates holiday, which is worth less to restaurants remains an important and comparatively straightforward relief measure, which the government has so far not extended.
“Government support to date has been broadly good but it is essential that this good work is not undone through the lack of correct financial support, through this next more difficult stage,” the letter states. As the industry now faces a challenging 12 — 18 month period, the letter presents a six-point plan to mitigate those challenges and save businesses.
- The business rates relief needs to be extended from 31 March for a further 6 to 12 months;
- 5 percent VAT on food should continue for another 12 months; consideration should be given to reducing VAT on drink sales too;
- The CBILs one-year interest free needs to be extended to two years and the repayment term extended to 10 years;
- Give consideration to paying the NI/PAYE contribution on the furlough scheme for small businesses only;
- Government should support the landlord / tenant negotiations by ensuring no foreclosures by banks on landlords — the solution to ongoing the rent problem.
- Deferred VAT and PAYE via the Time to Pay Scheme needs to be extended to three or five year payment plans.
The letter says that ensuring the survival of hospitality businesses is critical to the wider recovery plan for the country post-pandemic. “When the country emerges from this pandemic, surviving hospitality businesses will be pivotal in restoring a sense of normality, by providing experiences for a nation that has sacrificed so much,” it says. “If adequately supported, hospitality can play a vital and significant role in reviving the UK’s economy, driving recovery across the UK, as it did following the 2008 financial crisis, when it created 1 in 6 new jobs over the subsequent decade.”
The government — and especially the treasury — is aware of this fact. It will want to safeguard hospitality, less for its remedial role in Britain’s social recovery, but for its cold, hard potential in creating jobs and facilitating economic rebound.
Knowing it is one thing. Acting at the right time is another. Yet again, the British government finds itself with the ball in its court having failed to string its racket.