The chancellor has been accused of chasing “catchy, sexy headlines” in today’s budget as operators say the benefits will not extend to the capital’s hospitality businesses.
Rishi Sunak announced a number of measures intended to act a “a bridge for businesses” during the coronavirus outbreak, including the abolishing of business rates for firms with rateable value below £51,000 for 12 months, an extension to HMRC's Time to Pay scheme, a £3,000 cash grant for those eligible for small business relief as well as the creation of a business loan scheme to help small and medium sized operators access up to £1.2m.
The government also announced that businesses with fewer than 250 employees will have Statutory Sick Pay for any employee off work due to coronavirus refunded by the government for up to 14 days.
Jonathan Downey, co-founder of London Union – behind the Street Feast group, disagreed with the chancellor that his was a “plan for prosperity” as far as the hospitality industry was concerned, calling it “catchy, sexy headlines” that in essence would not make any difference to easing immense pressure faced by operators who are already reeling from the impact the coronavirus.
“I wasn’t expecting anything that’s supporting my business and that’s what I’ve got,” he told The Caterer. While he welcomed SSP relief he said that scrapping business rates for those with rateable values of £51,000 will not help businesses in London, which has an average rateable value of £64,000, and certainly would not save businesses hardest hit by the impact of coronavirus. The average rateable value for businesses across the whole of England is £33,000 with the South West region averaging the lowest at £23,000, according to 2018/19 data published by LG Inform.
And despite the coronavirus business loan scheme proposed for small- and medium-sized operators to boost their working capital to cover salaries and bills, he told The Caterer that even this morning his business had been declined an overdraft facility of £250,000 by a bank who said wasn’t something their credit team would be keen on agreeing with the casual dining market. “We have a great business and model – the bank of England has relieved restrictions on lending – but none if it will reach businesses like mine though as banks aren’t interested in lending to hospitality,” he said.
Kate Nicholls, chief executive of UKHospitality, agreed saying the chancellor had "utterly ignored" larger businesses. She added: “Hospitality businesses are on the front line of coronavirus impacts and need support as footfall and bookings drop and people self-isolate, and as serious cashflow problems arise.
“While easing business rates burdens and partial refunding of statutory sick pay will help support some businesses but while the measures announced today may give smaller hospitality businesses some breathing room, it’s vital to recognise larger operators, and the huge number they support, but which have today been utterly ignored at a time of business crisis."
Nathan Evans, operations director of steak group Smith and Wollensky, said: "All of the government’s actions have been based on small businesses with a rateable value of £51,000 or less. Quite frankly it’s pitiful and there should have been a pro rata rebate on business rates that would have given 25% back immediately - that would have been worth celebrating.
"It's difficult to see how you sustain a business that has lost 25-30% of its revenue without making people redundant, which doesn’t help the exchequer in any way."
Des Gunewardena, CEO of D&D London, said: "HMRCs Time to Pay will help companies of all sizes deal with cash liquidity issues. The other measures are positive but geared mainly to smaller businesses."
Asked what he would like to see from the government Gunewardena added: "Clear and robust communication as the virus develops to ensure that the general public makes the correct and proportionate adjustments to behaviour but does not get panicked or encouraged into disproportionate desertion of restaurants, cafes and bars making the economic crisis we are facing worse than it needs to be."
However, for those with businesses outside London the reforms are likely to offer some relief in difficult times. Andy Laurillard, co-founder of Giggling Squid told The Caterer: “It’s very welcome news that the government is taking the leisure sector’s upcoming challenges extremely seriously.”
Laurillard said the business rates relief would be likely to apply to around half of the group’s estate if it is applied on a site-by-site basis, while the extension to Time to Pay would be very good for businesses, if HMRC follows through on the chancellors announcement.
National chairman of the Federation of Small Businesses (FSB), Mike Cherry, said: “Suspending business rates for small high street firms is a huge bonus for our town centres and high streets. Together with extra cash for those that already qualify for small business relief, this shows a real commitment to supporting small businesses at the heart of communities.
"The case for fundamental reform to bring down the burden of such a regressive tax on bricks-and-mortar businesses is now stronger than it has ever been, and FSB is ready to help the government deliver this."
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