Operators call for meaningful long-term support to get them through latest lockdown

06 January 2021 by
Operators call for meaningful long-term support to get them through latest lockdown

Operators have called for more meaningful long-term support to support the hospitality sector through the latest lockdown, particularly an extension of the current VAT reduction.

Although business owners welcomed the chancellor's announcement yesterday that companies in the industry would get a one-off grant of up to £9,000 to help them through to the spring, it has been described as a short-term policy when many operators do not expect to be open before March or April, and even then under Covid restrictions.

Raphael Herzog, chair of the Bristol Hoteliers Association, said many hotels see turnover of £700,000 a month, some even £1m, so for them a grant of up to £9,000 is "just a token gesture which does little to provide any significant help".

Alasdair Elwick, general manager of the Forest Side in Grasmere, Cumbria, said extending the VAT cut until the end of the year would save jobs and allow businesses to plan, while the one-off grant would cover very little of his business costs.

"When everybody reopens, we're still going to be working in that reduced=capacity, Covid-secure environment, which is right, but if that [VAT] went to 20%, I can't see properties staying open… I think the UK travel industry will be really strong next year and we'll have a great year, but give us a chance to recoup some of the losses we've had this year," he said.

"I'll take anything we can get at the moment, but having looked into it, it won't even touch the sides," said Luke Garnsworthy, chief executive of Crockers, which has sites in Tring, Hertfordshire and Henley-on-Thames, Oxfordshire. Despite not being open, his business costs include around £10,000 a month in standing charges and a further £10,000 a month in national insurance and pension contributions.

"I've just had a £15,000 bill for the last quarter, which I can't pay because I've had to use every penny just to keep the business afloat and pay my staff," he added.

"Just some clarity would be massive because it's incredibly scary being an owner at the moment. Trying to keep a relatively small business afloat is really hard."

Paul Foster, chef-patron of Michelin-starred Salt restaurant in Stratford-upon-Avon, expressed frustration that the grant system is based on the rateable value of business premises. Despite having high costs and turnover, his restaurant property falls into the lowest grant bracket. His fixed costs are also in the region of £10,000 a month – despite this, his business is eligible for the lowest payment of £4,000, which will have to be spread over approximately three months.

"I don't want to be ungrateful, I think it's just really short-sighted. They're just basing it on the wrong thing," he said. He instead suggests that turnover is a better measure of a business and is what other countries in Europe have based their financial support on.

He said the extension of the VAT cut would be "massively helpful", but warned that the government needs to be careful that when it does increase again, "it needs to be gradual and to a fair amount".

Peter Borg-Neal, executive chairman of Oakman Inns, called on Twitter for a raft of measures to support the industry, including making the VAT cut permanent to enable the sector to recover. He also called for an extension of business rates relief for another year, for hospitality businesses to be allowed to use their corporation tax losses to offset other tax liabilities, including VAT and PAYE, and to reinstate or replace the promised Coronavirus Job Retention Bonus.

The scheme was due to pay employers £1,000 for each member of staff retained until the end of January, but was deferred following the extension of the furlough scheme to March, leaving businesses scrambling to balance their budgets.

"That was going to help what was expected to be a very slow January," said Foster.

Meanwhile, Garnsworthy also expressed concerns over holiday allowance that staff have been accruing while on furlough. "I don't know how the government think we can afford to pay it, having had no revenue, and how we're supposed to restart our business with people wanting to use this holiday up," he said.

He added: "This last month has shown that our industry is not the problem, because we've all been closed but the numbers have skyrocketed. That's the biggest frustration, that we continue to get punished. We spent a fortune on screens and sanitisers, we've lost covers, yet we're always the ones that gets hit with the stick first."

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