Tuesday 22 September 2020 1:38 pm

Business groups call for further support as UK tightens restrictions

Save our SMEs

The government must set out a new support package as new restrictions threaten to derail the economic recovery, business groups have warned. 

Addressing the House of Commons today, Boris Johnson dealt a devastating blow to the hospitality sector as he unveiled plans for a 10pm curfew.

And as he warned of a second wave of infections, Johnson announced that all retail and hospitality workers will also be forced to wear face masks at all times. 

The hospitality sector, already struggling with reduced capacity, is calling on the government to unveil new support measures to weather the storm in the face of new restrictions. 

Read more: Coronavirus: Boris Johnson imposes stringent new restrictions for up to six months

Government must set out new support for firms

As hundreds of thousands of businesses face losing the furlough lifeline at the end of this month, leading business groups have called for a fresh support package to support firms through the recovery. 

There have already been some indications that the government will extend some support measures as the UK faces a second wave.

Following numerous calls for a sector-specific furlough scheme, the PM last week said the government “will continue to show great creativity and flexibility”.

And Chancellor Rishi Sunak is set to extend the government’s coronavirus loan schemes until the end of November, according to the Financial Times.

But with a fresh round of restrictions, hitting the already struggling hospitality industry, business groups are calling for more comprehensive support.

The Federation of Small Businesses (FSB) warned that while many firms had cash reserves to carry them through the first lockdown, further restrictions could prove devastating.

Roger Barker, director of policy at the Institute of Directors (IoD) said: “With the return of more restrictions, the onus is squarely on the Government to set out the next phase of its support.”

The IoD is calling on the government to cut Employers’ NICs, as well as extend emergency insolvency measures to remove the threat of liability for “wrongful trading” from struggling firms seeking finance.

Adam Marshall, director general of the British Chambers of Commerce echoed these calls: “The government should waste no time in setting out a comprehensive support package for firms forced to close or reduce capacity through no fault of their own.”

And FSB chairman Mike Cherry said: “Policymakers now urgently need to map out the support measures that will follow-on from the job retention scheme, cash grants announced earlier this month and emergency finance initiatives.”

Read more: Coronavirus curfew would ‘devastate’ hospitality industry, experts warn

Hospitality sector faces ‘ruin’

Within the hospitality industry, there are renewed calls for an extension of the furlough scheme past the 31 October cutoff date. 

The British Beer and Pub Association (BBPA) and UK Hospitality have today called again for an immediate sector specific furlough scheme to save hundreds of thousands of jobs.

The industry bodies are also asking for extended VAT cuts and a business rates holiday.

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UK Hospitality boss Kate Nicholls said, on the prospect of restrictions being in place for six months: “Lots of businesses will not survive this and we are going to see more and more people lose their jobs unless we have the support to counterbalance these restrictions.”

“The Government must immediately announce an exhaustive package of financial support, otherwise our sector is facing ruin.”

“Unless it is extended for our sector, businesses are inevitably going to have to make staff redundant. We are looking at a steady stream of job losses for six months, otherwise”, Nicholls added.

Since reopening in July, many pubs have struggled with fragile public confidence and reduced capacity due to social distancing guidelines. Removing a key trading hour for pubs will only impede the recovery further. The BPPA said it was a “heartbreaking” decision that would devastate the sector. 

Chief executive Emma McClarkin said: “Make no mistake, a 10pm curfew will devastate our sector during an already challenging environment for pubs. Pubs were struggling to break even before today and these latest restrictions will push some to breaking point.” 

Additionally another u-turn from the PM – this time on working from home – will see the sector struggle even further as town centres remain abandoned.

This will be a “hammer blow”, Milan Pandya, a business advisory partner at Blick Rothenberg said.

The “announcement of further restrictions including the revised message that those who can do so should work from home and may need to do so for a period of at least 6 months it is imperative that the support measures introduced by the Chancellor are also extended, otherwise businesses will suffer and unemployment will rise”, he said.

Read more: Boris Johnson signals that targeted furlough extension is on the cards

Curfew decision based on ‘little evidence’

Critics of the government’s decision to impose a curfew on hospitality venues claim there is little evidence that pubs are more unsafe than other venues. 

The curfew “seems to have emerged from a random policy generator”, said Christopher Snowdon, the IEA’s head of lifestyle economics. “The government should publish the evidence upon which this decision was based.” 

Government data shows that just five per cent of infections outside of the home are related to hospitality. Nicholls claims that where these restrictions have been put in place locally “they have not cut infection rates, merely damaged business and cost jobs.” 

“There seems to be little available evidence that pubs, with their strict adherence to Government guidelines, are unsafe, so we are unsure that this blanket measure will make a major difference”, added McClarkin. 

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