The chancellor’s latest package of financial support for industry does not go far enough to sustain struggling hospitality businesses and their suppliers, industry leaders have warned.
Rishi Sunak unveiled a raft of measures yesterday in a bid to help businesses protect jobs which remain impacted by the coronavirus crisis.
It follows the prime minister’s announcement on 22 September setting out new restrictions to help curb the spread of coronavirus, which included a 10pm curfew for bars, restaurants and pubs.
The new job support scheme will see people who have not been able to return to the workplace full time due to the pandemic receive three quarters of their normal salary for six months from 1 November, with the help of a government top-up.
It’s part of the chancellor’s ’winter economy plan’ and set to replace the furlough scheme.
To be eligible, staff will have to be working a third of their usual hours per week.
An extension to the 5% reduction in VAT to 31 March 21 was also among the announcements.
“The decision to introduce the jobs support scheme and to extend the VAT cut for hospitality are welcome from the government but simply do not go far enough,” said Food & Drink Federation CEO Ian Wright.
“The requirement for staff to be working part-time to be eligible for support will not be enough to sustain hospitality businesses and their food and drink manufacturing suppliers – the squeezed middle – through a difficult autumn and winter where pubs, bars and restaurants will have significantly reduced custom.
“The pandemic has had a far greater impact on some sectors of the economy than others – sectors that would continue to support millions of viable jobs once a vaccine is achieved and social distancing can end. Only by continuing a targeted furlough scheme while the current restrictions remain will we avoid mass long-term unemployment and the decimation of a sector that could otherwise support our economic recovery once the pandemic is over.
”We urge the UK government to engage with those industries most impacted about what more can be done to support those food and drink businesses most affected by the restrictions.”
Federation of Wholesale Distributors CEO James Bielby told The Grocer: “We welcome the measures, such as the subsidy to support those in part-time work and the VAT cut extension, but they still fall short of the support required for the wholesale sector, which is critical to the food supply chain, public service infrastructure and the UK economy. Without business rates relief the sector faces widespread redundancies, which will have disastrous knock-on effects for the entire hospitality sector and food supply in the UK.”
British Retail Consortium director of business and regulation Tom Ironside said: “We welcome the chancellor’s Job Support Scheme, which will help reduce job losses for eligible companies. Furthermore, the VAT reduction for cafés and food-to-go will be welcomed as many continue to suffer as a result of low footfall and the government’s ‘work from home if possible’ guidance.
”We look forward to seeing the details of the additional flexibilities on loans and tax deferrals that have been announced. Retail is on a delicate path to recovery, but the looming threat to this remains the £8bn business rates cliff-edge from April 2021. Retailers need certainty and the chancellor must take action and bring down the business rates burden in order to avoid unnecessary job losses and shop closures.”
British Beer & Pub Association CEO Emma McClarkin said: “Following the additional restrictions announced earlier this week and their devastating impact on the already precarious situation our sector is in, we were really hoping for a strong package of support today. Some elements of the chancellor’s plan are welcome, but do not go nearly far enough to save the thousands of pubs and jobs that we have highlighted are at serious risk.
”The VAT cut extension on food and soft drinks will help our sector and it is great to see the chancellor answer our urgent call for this. However, the extension is only for six weeks and only takes us through to the end of the current restrictions – it needs to be much longer to help our sector recover.
”Furthermore, where those pubs and bars that are not food focused are concerned, the chancellor has missed a golden opportunity to extend the VAT cut to include alcohol.”