Helping you prosper

A delay to lockdown easing hits hospitality hard

As businesses had readied themselves for a potential full reopening next week, the much-rumoured extension of the ‘Freedom day’ date came as no real surprise, yet still another sideways knock.

Pubs, restaurants and other hospitality venues will be forced to continue to operate with limits on numbers and the need to manage distancing restrictions effectively for at least another four weeks, with many already having planned additional staffing and stock in preparation for the original 21 June date. UK Hospitality have estimated that the four week delay would cost the sector around £3bn in sales. 

A further review will take place in two weeks, which should shed more light on the decision likely to be taken regarding Johnson’s promised “terminus date” of 19 July for the lifting of all remaining social distancing restrictions.

Despite attempts from industry leaders and trade bodies, the Government have rejected calls for further extensions to the furlough scheme and other government backed financial support, instead suggesting that businesses turn to local authorities, who have £1bn of unspent money to support businesses. The Government have suggested that this additional funding could be used to support businesses with business rates or for contribution to furlough payments.

Financial support dwindles from the end of June

While financial support is still available from the government, the level of support is changing across many of the schemes from the end of this month. The furlough scheme is currently due to run until 30 September, but the government contribution to the scheme will taper off from the end of June, with only a 70% subsidy from the government and employers expected to contribute 10% toward the total 80% payment due to employees. UK Hospitality estimate that 300,000 jobs in the sector currently remain protected by the scheme.

Business rates holidays also come to an end on 30 June, with the hospitality sector seeing an additional hit from a move to a 67% business rates discount, capped at £2m, until the end of the financial year.

And the end of the month also heralds an end to the ban on commercial property evictions, with landlords able to start legal proceedings against non-paying tenants from 1 July. 

UK Hospitality have issued a statement calling for urgent further support in response to the announcement, urging the government “to waste no time in providing details of how it will safeguard the future of thousands of venues and hundreds of thousands of jobs”, highlighting the need to counter the end to the business rates holiday from next month as a key issue to be addressed.

A delay in the move to Step 4 brings further misery to the Hospitality sector, with one in four businesses still unable to open. Those which are open are struggling to break even, so without extended sector specific support, there will be continued job losses and businesses failing across the UK.

The next step

For more information, please contact Martin Jones or your usual UHY adviser.

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