Hospitality is in Rishi’s last chance saloon by Alex Reilley
Tomorrow’s (Wednesday, 3 March) Budget is arguably the most important day in the history of the hospitality sector. What the chancellor announces when he stands at the dispatch box could either give some desperately-needed hope to our battered sector or it could sadly crush thousands of hospitality businesses in a single, devastating blow.
Significantly, what the chancellor says, and more importantly, does, will very much demonstrate the importance the government places on the survival of a large proportion of the sector and whether the loss of thousands of hospitality businesses and hundreds of thousands more jobs will just go down as regrettable collateral damage.
We will learn whether this government truly understands the invaluable role our sector – pubs, bars, cafes, restaurants and hotels – plays in everyday life. We will also learn whether the enormous contribution hospitality makes, both economically and in terms of employment, is recognised, and most significantly, respected by the chancellor.
To be clear, this industry, which is a massive employer of young people and in normal times an absolute economic powerhouse producing millions in taxes to fund public services, needs more than warm, sympathetic words. We’re not looking for simply an extension of existing support measures. We need meaningful measures that ensure hospitality businesses can genuinely survive until they are permitted to reopen and, on the other side of the immeasurable devastation the hospitality sector has endured, there is a future for the businesses that have made it this far.
The chancellor will of course point to the enormous support the sector has received to date and the government’s consistent messaging on this has convinced most that we are very well supported. The truth is the furlough scheme has been amazing support for our employees but the need for businesses to support the scheme when most have no revenue makes it feel far from supportive for the employers.
Yes, it’s helped businesses hold on to their teams and we have a workforce that can be reactivated, but given the cost of employers’ national insurance and pension contributions we have had to bear since November, I wonder how many businesses would have been forced into the heart-breaking decision to lay off their staff in order to preserve cash had they known they wouldn’t be able to reopen until 17 May?
This is particularly true of thousands of hospitality businesses that haven’t traded since 4 November because they went from lockdown straight into tier three. Many have not taken a penny for 120 days and will not for a further 74 days – more than half a year of trading lost. It’s a huge ask for those companies to find the cash to keep contributing to keep their teams. That said, hospitality is all about looking after people and you can bet the last penny spent before the cash runs out will be spent on supporting staff.
The plight of small businesses in our sector is desperate and continues to go largely unrecognised. Business failure in our sector has always been notoriously high but it’s rare very good, viable businesses fail. Sadly, another travesty of the pandemic is this is already happening on mass as small businesses, that had a bright future pre-pandemic, go under through no fault of their own. They have simply run out of cash.
Without more support, this is just the tip of the iceberg. Is this chancellor going to let a generation of hospitality entrepreneurs and their businesses, some of which could be the big businesses of the future, just slip under the water? The worrying fact at the moment is we simply don’t know and sadly we suspect he might.
In truth in the past few months, and despite the tireless efforts of many within hospitality, the sector has felt increasingly marginalised by a government that simply doesn’t feel the need to listen. Ministers with broad portfolios have done their best but we have not been engaged at anywhere near the right level of government 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.
The 10pm curfew and alcohol served only with substantial meals being two such (nonsense) examples of government thinking it knows best and where the sector wasn’t part of the conversation. These were huge decisions, and to not engage with a sector that directly employs 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”.
So, we wait anxiously for the chancellor’s announcement. The fact we are having to wait nine days following the unveiling of the much-anticipated roadmap out of lockdown for a Budget that for many has an existential bearing on their businesses, feels unnecessarily cruel.
We hope the chancellor rediscovers some of the affection he showed towards the sector in June last year and throws the lifeline it so desperately needs; that he provides enough support to enable hospitality to survive, heal and repair.
For now, for many, having endured severely disrupted sales for the best part of a year, everything hinges on tomorrow's Budget statement. Many hospitality businesses are in the last chance saloon – it is the busiest bar in town.
Alex Reilley is co-founder and chairman of Loungers, a listed bar-cafe business with 170 venues located across the UK