Chancellor Rishi Sunak has launched a fresh £1bn rescue package to help sectors worst hit by the Omicron-induced economic storm survive.
Pubs, bars and restaurants across England can now receive a one-off no strings attached payment of £6,000 per venue, the UK government announced today.
Sunak said: “We recognise that the spread of the Omicron variant means businesses in the hospitality and leisure sectors are facing huge uncertainty, at a crucial time.”
A new pot of over £680m has been made available by the Treasury to fund the grants.
As part of the measures, employers with fewer than 250 workers will be able to apply to have the cost of Covid-related staff absences covered by the taxpayer for up to two weeks per employee.
An extra £102m is being pumped into local authorities across England to hand out to businesses they identify as most in need of support. An extra £30m has also been earmarked for museums and theatres.
Some £154m has been made available for the Scottish, Welsh and Northern Irish devolved administrations.
Prime Minister Boris Johnson said: “With the surge in Omicron cases, people are rightly exercising more caution as they go about their lives, which is impacting our hospitality, leisure and cultural sectors at what is typically the busiest time of the year.”
The additional support comes as London hospitality venues are being whacked by a sharp reduction in people heading into the capital’s centre due to fears over contraction Omicron in the run up to Christmas.
Pub chain Fuller’s announced today it has shuttered its busiest London venues indefinitely, blaming a lack of government support for the limping hospitality sector.
Hospitality firms tend to rely on an upsurge in income over the Christmas period to tip them into profitability.
But, a flight from city centres has eaten into their already wafer-thin margins, threatening the long-term viability of many businesses in the sector.
Paul Johnson, director at the economic think tank the Institute for Fiscal Studies, said this morning Sunak has enough room to prop up pubs, bars and restaurants through the Omicron wave as a result of borrowing being “very cheap”.
However, fresh figures released by the Office for National Statistics today reveal the precarious position the public finances are in due to high cost of dealing with the pandemic.
The government borrowed £17.4bn in November alone, £3.2bn more than forecast by the government’s spending watched the Office for Budget Responsibility.
The debt interest bill climbed at the fastest rate in over a decade, driven higher by inflation letting rip across the UK economy.
Business leaders criticised the package for not extending support to the travel sector that has also been hit hard by the emergence of Omicron.
“The international travel and tourism sector remains disappointingly out of scope despite the heavy toll it has taken for many months and its vital role in enabling international trade and supporting jobs,” said Rain Newton-Smith, chief economist at the Confederation of British Industry.
Others called on the government to maintain support well into 2022.
Roger Barker, director of policy at the Institute of Directors, said: “With the unwinding of a number of remaining support schemes at the end of Q1 2022, such as the VAT reduction for hospitality and business rates support, businesses also need the reassurance that these measures will now last for longer into 2022.”