For a long time we have operated a “Last Chance Saloon”, a section of our beer menu to highlight those products just about to go out of stock, giving you a last chance to try them, or have one last taste of them before they are gone (for it is not often we repeat order beers). It is a concept that has carried through into our Webshop as a clearing house for the last cans of products that are hogging disproportionate amounts of shelf space in the Fridge of Dreams™ and stopping us getting new beers in. It is also a concept that now seems to fit the entire hospitality industry into it, especially on the eve of the Chancellors Budget. What measures he announces tomorrow will either give some longed-for hope to the sector or it could, in a single fell swoop, destroy thousands of previously viable businesses. Tomorrow is probably the single most important day in the history of hospitality.
What Mr Sunak conjures up will be a clear indicator of how much value this government places on the sector’s contribution to the finances of the nation, and perhaps even more importantly, on the role it plays in everyday life and society at large. They may take the view of course, that hospitality is to be sacrificed for some twisted idea of the better good and the loss of thousands of businesses and hundreds of thousands of jobs is simply collateral damage, ignoring the enormous contribution economically and in terms of employment made by the industry.
The hospitality sector is a massive employer of young people and in normal times an economic driving force, producing millions in taxes to fund increasingly valuable public services and it needs to hear more than platitudes and sympathy. We do not need an extension of existing support measures, we need a significantly more meaningful response to ensure hospitality businesses can survive until they are permitted to reopen properly, leaving the devastation of the last year behind them and look to a future with positivity.
Of course, the Chancellor will try to gain plaudits for the support the sector has received to date, having already been doing the media rounds to reinforce the government’s consistent rhetoric that has convinced much of the public and media that we are very well supported. His grasp of the numbers, for a chancellor of the exchequer and former banker, are pretty poor however, with his weekend assertion that the average hospitality business pays rents of £14k to 20k being very quickly and easily disproved by hospitality businesses, with average rents of more than twice that being very apparent, more so for London operators. If his grasp of the numbers is this poor, what hope is there tomorrow for anything more than the paltry support afforded to businesses this winter, which in most cases do not even cover half of rent, let alone other fixed costs, and the costs of maintaining furloughed staff.
Yes, that’s right. Furloughing staff costs a business money. This gets kept quiet by government and mainstream media. Whilst it has been an amazing support for employees and allowed businesses to hold on to teams, since November operators have had to bear the cost of employers NI contributions and pension contributions, despite most having zero revenue. The constant increases to lockdown length further compounds the issue now business are committed to these payments until being allowed to reopen.
We were not as badly affected as business in some areas where thousands of hospitality businesses haven’t traded since 4th November because they went from lockdown 2 straight into tier three, because we had a couple of weeks in December to earn what we could. Many have not taken a penny for 120 days and will not for a further 74 days. That’s more than half a year of trading lost, part of which is the festive period, the golden goose for the trade. It’s an impossible task for those companies to find the cash to keep contributing to keep their teams, rent and other bills.
The desperate situation for small businesses in our sector continues to go largely unrecognised. Business failure in hospitality is notoriously high but it’s rare good, viable businesses fail. Sadly, this is already happening on mass as small businesses, that had a bright future pre-pandemic, go under through no fault of their own, simply running out of cash. Without increased support, this is just going to get worse.
In the past few months, and despite the efforts of many within hospitality, the sector has felt increasingly marginalised by a government that simply doesn’t feel the need to listen and it would appear when it comes to the major decision-making about the fate of our sector, the government prefers to defer to single-minded civil servants with little-to-no understanding about the sector or media personalities long distanced from the harsher realities of the trade. The 10pm curfew and alcohol served only with substantial meals are perhaps the two most ridiculous examples of this government thinking it knows best and refusing to bring the sector into the conversation. To not engage with businesses that employ more than three million people, of which 50% are under the age of 25, created a sense that some people at the top of government view our sector as “second class” and unnecessary.
This leaves us waiting for the chancellor’s announcement a cruel nine days after the unveiling of the much-anticipated roadmap out of lockdown, rubbing further salt into the wounds of businesses for whom this Budget has very serious consequences. We can only hope the chancellor rediscovers some of the warmth he showed towards the sector earlier last year and throws the lifeline it so desperately needs.