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Tears and cautious celebrations as government pledges to cover 80% of wages through enforced closure

20 March 2020 by
Tears and cautious celebrations as government pledges to cover 80% of wages through enforced closure

Tears and cautious celebrations have followed news that the government will cover 80% of wages for at least three months after prime minister Boris Johnson ordered pubs and restaurants to close.

Johnson told cafés, restaurants and pubs to close tonight and not to open tomorrow, but said they could continue to offer takeaway and delivery services. He said the situation would be reviewed each month to see if restrictions can be relaxed. No mention of hotels was made in this evening's press conference but the cabinet office has confirmed to The Caterer that the closure order will extend to bars and restaurants within hotels.

Chancellor Rishi Sunak said all employers would be eligible for grants to cover up to 80% of wages of people not working but being kept on payrolls. The relief available will be up to £2,500 a month per employee, just above the median income.

Grants to cover wages will be backdated until 1 March and will be available for at least three months. Sunak said there would be no limit to the amount of funding that will be available via the scheme as he unveiled what he called "unprecedented measures for unprecedented times".

He added: "We will pay grants to support as many jobs as necessary."

The chancellor has also deferred the next quarter's VAT payment, giving business until the end of the financial year to pay this bill, as well as announcing that the Business Interruption Loan Scheme will be available from Monday and will be interest free for 12 months.

He issued a plea to businesses to keep their staff on the payroll and to look at all the support available before cutting jobs. He told businesses: "The government is doing its best to stand behind you and I'm asking you to do your best to stand behind our workers."

The industry, led by UKHospitality, had been calling for urgent support to prevent the loss of at least a million jobs in recent days.

Early responses have welcomed the additional measures, but stressed the need for the relief to come quickly. Kate Nicholls, chief executive of UKHospitality, said: "This generous package that will support our fantastic staff is very welcome and additionally gives hope to those who have been laid off. This may have saved up to one million jobs, but we need it as soon as possible to ensure we can continue to trade.

"While VAT deferrals preserve some cash, we still face rent payments next week before the support is due to arrive. Banks and landlords need to do more to help us bridge the gap towards this generous government support. Damage is being done now, so we need help now."

Tim Foster, founder of Yummy Pubs, told The Caterer: "They listened and we were right to hold out. From what we understand there was no way this was going to happen at the start of the week but by standing firm and not closing we've got an encouraging package.

"We need to see the detail but as it stands on the face of it, there's no need for me to lose a single person. I'm glad we have held on and not made the decisions a huge amount of businesses have had to make, but they should not have been forced to put their people through this."

Stuart Procter, chief operating officer of the Stafford Collection (comprising the five-red-AA-star, Stafford London hotel in St James, the four-red-AA-star Northcote hotel in Langho, Lancashire, and Norma restaurant in Fitzrovia), said it was "amazing news" and praised the work of UKHospitality chief executive Kate Nicholls, who he said has been "an outstanding ambassador for our industry".

He added: "The government has done everything to help every business, I don't perceive any of us could have asked for more than what we've got now."

Tommy Banks, chef director of the Black Swan in Oldstead and Roots in York, tweeted his relief: "So relieved and I cannot stop crying. Our team now have security. Well done Rishi Sunak you did what needed to be done. We are all in this together."

The move to tell pubs and restaurants to close was also was widely welcomed, "finally, that's what we need to hear," said Adam Reid, chef-patron of Adam Reid at the French in Manchester, while Oli Martin, head chef at Hipping Hall, in Lancashire, said: "Amazing news! Thanks for pulling through British government. Going to be a lot of people happy they can continue in the job that they love."

Sacha Lord, night-time economy adviser for Greater Manchester, also tweeted: "Finally. Some much need and much overdue good news for staff!"

Jonathan Downey, chief executive of London Union – behind Street Feast, told Sky News: "I think the size of the intervention is fantastic and every new measure is helpful." Downey predicted that the chancellor has saved hundreds of thousands of jobs, saying that having 80% of wages covered is more than the industry had hoped for.

Gary Neville of GG Hospitality, the company behind Manchester's Stock Exchange and Hotel Football, tweeted: "Brilliant, Rishi Sunak stepped up".

Jane Pendlebury, chief executive of the Hospitality Professionals Association (HOSPA), said: "All in all, today's briefing was a welcome one. The chancellor has provided a more definitive instruction – we now know the businesses that need to close – whilst offering significant wage assistance, a move that should serve to allow many hospitality businesses to stay afloat for longer in what are proving to be very rough seas.

"Many of HOSPA's members will be breathing a sigh of relief that wages, at least, are safe and that they can still operate on some level."

UKHospitality advises hotels against accepting leisure bookings >>

Coronavirus advice hub for hospitality operators and employees >>

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