Chancellor Rishi Sunak announced one-off top up grants for retail, hospitality and leisure businesses worth up to £9,000 per property to help businesses through to the Spring.
The grants were described as “not enough” with Robin Sheppard, president, Bespoke Hotels, telling us: “Clearly our chancellor has no idea of the numbers involved in keeping hotels afloat, but for small businesses we should be grateful.”
Steve Lowy, CEO of Anglo Educational Services and The Residence Apartments told us: “£9,000 isn’t going to go anywhere. We’ve been paying less rent, but landlords are deferring the remainder; it means we are still paying around 50%, 60%, as we realise that the landlords are a business too. We’ve been lucky to generate revenue, and we’ve been able to hustle business.
“The communication from the government is terrible: you get a speech and then there’s a week before any detail. Business wants certainty. It’s been very tough. One of the big issues for Rishi Sunak to face is the deferred rent time bomb, which will be between £10bn and £15bn by the end of this. The problem now for most is cash flow, which is being addressed with CBILS, but the problem for the future is rent.
“One solution would be for the government to help fund the landlords, publicly, then they can pass that along to the tenant; the way it has happened across Europe.
Commenting on the CBILS scheme, Lowy said: “We waited until August to start the CBILS process, although we had been keeping the bank updated of revenue levels and loan requirements, because a lot of our business comes in chunks through student groups, and it’s only just gone now to Credit. We started modelling in April and we’re now on version 149 of the forecast. The process is incredibly detailed; we’ve been asked about the cashflow in September 2023. We’ve played the game and now it’s getting a bit more critical. We hope to get approved this week, but the latest announcement will mean more hotels needing more help than the original CBILS they applied for.
“If you want to have global Britain then you have to give reasons to come. If you kill the essence of a city like London, you kill the reason why people want to come here, whether it is hotels and restaurants, or theatres, galleries, and venues. I had hoped that Boris would be like Hugh Grant in Love Actually, getting the girl in the end, but actually, he’s been more like Benny Hill, running around in a frantic & aimless manner.”
Kate Nicholls, CEO, UKHospitality, said that the sector needed “a long term economic plan, to know what the support will be after March. We are past the tipping point where we can save all hospitality businesses. We need an urgent signal from the government that they will extend the rate relief. But we will see business failure and we will see jobs lost. It’s helpful that the government has recognised that these need to be cash grants, but this is a sticking plaster.
“When we come out of this in March, businesses will have to find a year’s worth of rent.”
UK Hospitality has estimated that continuing the VAT and business rates holiday would cost around £4bn. Nicholls said: “We need to tackle the persistent scar caused by this through unemployment.”
Under the plan, the Treasury will also offer a £594m discretionary fund.
The moved followed the Prime Minister’s announcement that these business will be closed until at least February half-term in order to help control the virus.
The cash was provided on a per-property basis to support businesses through the latest restrictions, and was expected to benefit over 600,000 business properties, worth £4bn in total across all nations of the UK.
Sunak said: “The new strain of the virus presents us all with a huge challenge - and whilst the vaccine is being rolled out, we have needed to tighten restrictions further.
“Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the Spring. This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”
Insight: So the shock, no shock announcement is out and the sector is once again rattling at Number 11’s door wondering how it ended up on the naughty list after a terrible Christmas which has not left the coffers replete. Certainly not replete enough to pay for a year’s deferred rent.
One voice which is starting to be heard ever louder, even if not by Sunak, is that of the suppliers. Emma Heap, founder, Chapter One brewpub in Bath, told this hack that “the supply chain gets left high and dry in these situations. Hospitality can't exist if the breweries, drinks producers, snack suppliers and distributors all disappear.”
And she’s right. The stakes are growing as businesses close in on a year of disrupted trading - ‘disrupted’ being the mildest word out there. The lockdown looks familiar and, sadly, even the messaging is the same - let’s make it through to the next fake deadline. Hospitality needs a long-term plan to right itself and a government which has faith in its long-term prospects.