Chancellor Rishi Sunak Tells Hospitality That It’s Not His Round

Chancellor Rishi Sunak — he in charge of the nation’s finances — has responded to the widespread calls heard over the last 48 hours from restaurateurs, chefs, pub owners, and hospitality leaders that the impact of a spree of cancellations and closures demands commensurate levels of financial support in what is typically the busiest trading period of the year. In short, he’s told them that — for now, at least — there will be no extra money or relief.

In a message broadcast last night, 16 December, Sunak said he had spoken to “leaders in the hospitality space” about the indirect impact of Plan B restrictions on restaurants and pubs in the face of omicron and the recent rise in infections.

The executive summary of his message: There is not going to be any further support, financial or otherwise. Instead, Sunak pointed to the ongoing relief available to hospitality businesses, including the reduced rate of VAT in place until the spring, and the business rates holiday which is in place until the second quarter of 2022. The reference to VAT has particularly rankled, as it only becomes a benefit when businesses have sales to be taxed. It is of precisely zero benefit when a business is closed.

Interestingly Sunak also pointed to a pool of cash which the government had already distributed to local authorities and which had not yet been issued in full to businesses. He said his priority now was making sure that money — almost half a billion pounds in total — ended up where it was most needed. Some, such as Mangal 2 in Dalston, have recently pointed to the unfair distribution of such funds by Hackney council and the likelihood is that administrative failures or delays will prevent those monies from getting where they are most needed quickly enough.

Timing, is after all, everything. Because while there are no direct restrictions on hospitality businesses — indeed Prime Minister Boris Johnson explicitly said on Wednesday evening that “we are keeping hospitality open” — the reality, with chief medical officer Chris Whitty in the same press conference explicitly telling the nation to “prioritise social interactions,” is that restaurants have seen trade fall off a cliff edge this week.

The effect of omicron on London restaurants has been extremely sudden: First, Christmas party and group booking cancellations; second, infections among guests meaning further cancellations; and third, infections among staff, or the risk of staff infection and attendant consequences for Christmas either forcing or leading businesses to close their doors.

But, the sense both from scientists — and by extension economists like Sunak — is that this wave will be short-lived, the peak will come early. The timing is also extraordinarily inconvenient and unlucky for hospitality business owners and their staff members. The Christmas period is one of the busiest and most lucrative times of the year, making cancellations and lost revenue more impactful; it is also a time when diners’ risk management will be at its most careful, given the potential consequences of spending Christmas alone in self-isolation. The working assumption appears to be that both the health and the economic crises will be weathered — that there is going to be some pain but that pain will be manageable and the recovery will be swift.

This is cold comfort to restaurants who are all too used to going into survival mode at the drop of a briefing. One London owner told Eater London last night, 16 December, “we just realised we were going to have to eat this. It’s going to fucking hurt but we have to do it.”

Nevertheless, restaurants, pubs, bars, cafes, and hospitality business leaders will continue to campaign for further assistance, because a) why wouldn’t they and b) the majority of them feel that the moral authority of the government has been irreparably eroded, with a series of revelations in the last two weeks of lockdown breaches and rule flouting at the heart of government.

What’s also true is this: Sunak has to look like he cares, otherwise he wouldn’t have flown back from America yesterday to speak to those in hospitality, but he has also calculated that there is currently neither a political nor economic imperative for him to do anything more than point to what he’s already made available and to insist that he will continue to care. He will hope that he doesn’t have to care for too long and that that a process of natural correction will commence early in the new year.

So before anything changes, businesses will continue to voluntarily close for Christmas, clamour for further help will grow, and the government, with myriad other problems and parties to organise and cover-up, will sit tight.