The Treasury is expected to announce only limited help for struggling hospitality firms today despite coming under huge pressure to address the ‘toxic cocktail’ of costs that businesses now face.
Following the four-week delay to Freedom Day, pubs, restaurants and nightclubs will see vital government support withdrawn while they are still forced to abide by Covid curbs.
This ‘triple whammy’ of costs includes demands for billions of pounds in rent debt, the resumption of business rates payments, and the winding up of the furlough scheme.
Last night, industry leaders warned that these costs, combined with the delay in lifting Covid restrictions until at least July 19, could force up to 25,000 venues to remain shut and cost the economy £4billion.
Following the four-week delay to Freedom Day, pubs, restaurants and nightclubs will see vital government support withdrawn while they are still forced to abide by Covid curbs
Ministers have insisted there is no prospect of extending most of the Covid support measures, despite the fact that nightclubs will be unable to open until late July and most pubs will have to struggle on with restricted capacity.
However, it is understood that the Treasury is likely to announce today that it will extend the ban on evictions for unpaid commercial rent.
This ban, which prevents landlords from taking businesses to court for unpaid rent, had been due to lift on June 30. It is expected that it will now be extended, perhaps into next year. A new arbitration system could also be established to sort out differences over unpaid rent between landlords and firms.
The hospitality and retail sectors are thought to have built up £5billion in rent debt during the pandemic and these debts will have to be faced at some point.
At the end of the month, the amount of government support for employees’ wages under the furlough scheme will fall from 80 per cent to 70 per cent.
The business rates holiday will end from June 30, with companies having to start paying a third of their rates bill in July – even if they are unable to open.
The concession on rent debt is unlikely to satisfy hospitality and pub industry leaders, who last night wrote to Boris Johnson to demand support after he announced a four-week delay to the easing of lockdown.
Groups including UKHospitality and the British Beer and Pub Association called on the Treasury to go further and delay the end of the business rates holiday for at least three months. Business rates payments would cost the sector £93million in July alone, they said.
A spokesman for UK Hospitality said: ‘Hospitality businesses are perilously close to a cliff edge of failure. In July a toxic cocktail of costs will kick in for venues still suffering from severely constrained trading or being legally forced shut because of the roadmap delay. The Government must extend the business rates holiday and rent moratoria to prevent these businesses collapsing, triggering hundreds of thousands more job losses.’
The hospitality sector leaders, which also included real ale group Camra and the British Institute of Innkeeping, told the Prime Minister they were ‘bitterly disappointed’ by the delay to the full reopening of their sector, which will cost pubs £400million alone.
Nick Mackenzie, chief executive of Greene King, which has 3,000 pubs, said his firm will be forced to pay £250,000 per day in business rates even though some are still shut
A spokesman said: ‘Many pubs cannot break even under current restrictions and around 2,300 remain closed. It is critical that the Government provides further support or else the recovery of our pubs will be over before they’ve even been given a chance.’
Nick Mackenzie, chief executive of Greene King, which has 3,000 pubs, said his firm will be forced to pay £250,000 per day in business rates even though some are still shut.
In accounts published yesterday, Caffe Nero, said any further Covid restrictions could put the coffee shop chain’s future in doubt.
Last night a government source told the Daily Mail: ‘We are looking at the rent moratorium. We are looking at options. We are confident that enough support is in place to enable businesses to get through the next month.’
The source also said the hardest-hit firms can apply for a share of £1billion of funding as part of a pot first announced last November.