The hospitality sector has been severely affected by coronavirus restrictions and I received many e-mails over the last few days highlighting the difficulties the sector is currently facing ahead of the Westminster Hall debate which took place on Monday 11th January. Unfortunately, I was unable to speak in the debate as the Leader of the House, Jacob Rees-Mogg MP, has refused all requests for MPs to be able to participate virtually in Westminster Hall debates, despite the national lockdown.
I am extremely concerned about the impact the lockdown and, prior to that tier restrictions, are having on our local businesses and workers. In Oldham and Greater Manchester we have seen restrictions for much longer than most other parts of the country which I know has had a profound impact on the hospitality sector. As I said in a recent webinar with Oldham hospitality businesses and my Oldham West and Royton colleague, Jim McMahon MP and Sacha Lord, Greater Manchester Night Time Economy Advisor, I have repeatedly pushed Government ministers for comprehensive support as well as a recognition of the need for timely decisions rather than the constant stop/start and mixed messages. Labour Party colleagues and I are clear that necessary public health measures must be matched by proper economic support for business and workers.
It is critical, particularly in the next few months, that businesses are given the support they need to survive. Many firms have taken on large amounts of debt to get themselves through the first phase of the crisis and have now experienced over 9 months of incredibly difficult trading conditions, with restrictions set to continue well into 2021.
With businesses in England facing further restrictions due to the lockdown, many are in a worse position than when we entered lockdown in March. Yet business grants are lower for most businesses than they were in March, and it seems many suppliers will not be able to access them as they are not legally required to close.
Last week the Government announced ‘one-off top up grants’ for retail, hospitality and leisure businesses which is intended to support businesses ‘through to the Spring’. Depending on how long restrictions last it is likely that the level of grant support being offered is lower on a per-week basis than the first national lockdown. According to UK Hospitality, the news that it could be early May for the sector to reopen, could mean that 1 in 5 will run out of cash well before May 2021.
In Greater Manchester 93% of hospitality businesses closed as a result of COVID and nearly one fifth of all jobs are in sectors that have been shut down, which is higher than any other UK region.
The Government’s support for the sector to date doesn’t even cover basic fixed costs. The furlough scheme has been a major source of support, but businesses still have some staff costs as national insurance and pension contributions must be paid by employers under the scheme.
In addition, accumulating property costs and rent debts are one of the biggest concerns facing the sector. Ongoing fixed costs and accumulating debt are problematic where businesses have low revenues and cash reserves.
It is clear that the hospitality sector has been particularly hard hit and it is vital that the Government stands by its commitment to do ‘whatever it takes’ by helping businesses and workers through this next phase of the crisis – including finally addressing the 3 million people currently excluded from support, and getting control of the virus so businesses can reopen in a safe and effective manner.
We have called for the £2bn recently returned to the Treasury by supermarkets in unneeded business rates relief to be urgently redeployed into a Hospitality and High Streets Fightback Fund to help struggling businesses on the high street and those excluded from support.
Businesses have done the right thing, adapting their premises and then closing them, to keep people safe, but the Government is not doing the right thing by them. We need our hospitality businesses on the other side of the crisis but the support is hopelessly inadequate.
In addition, we have called on the Government to re-open eligibility for the Coronavirus Job Retention Scheme so people who started new jobs after October 31st can be furloughed and for immediate clarity over what happens at the end of the furlough scheme – for example, what is the “incentive” that businesses will be offered for retaining furloughed staff, and what happens if there are delays in rollout of the vaccine? The Government must also consider whether requiring employers to pay National Insurance and pension contributions this time (unlike in March) is acting as a disincentive to retaining staff.
Many businesses have taken on large amounts of debt to get themselves through the first phase of the crisis and have now experienced over 9 months of low or no trade. With further restrictions being brought in, many are in a worse position than when we entered lockdown in March. We have repeatedly called on the Government to set out a plan for rebuilding business and tackling high levels of corporate debt. Without that, we risk rising insolvencies and yet more job losses.
I will continue to press the Government to ensure proper support to the hospitality sector. Having worked for over 10 years in the sector before I qualified, I understand the issues that so many of our local businesses and workers are facing.