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Thu 9th Apr 2020 - Opinion Special: Don’t bite the hand that feeds us, latest on the CJRS, pulling together and we will thrive again
Subjects: Don’t bite the hand that feeds us, latest on the CJRS, pulling together and we will thrive again
Authors: David Read, Richard Hartley, Nick Griffin and Andy Slee 

Don’t bite the hand that feeds us by David Read

This article is not a plea for decency, though I might stick with the argument even if it were. Neither is it in any way a judgement of how any of us are coping with a crisis that has no precedent in living memory. No, this simple plea is for our sector to adopt good commercial common sense, entirely in our own interests, regarding the payment of suppliers during this crisis. I’d like to set out why we need to support them to the very best extent that we can, to benefit ourselves as we reopen our doors.

At the moment, the first document we all reach for every day is the cash flow forecast. Of course, everyone in our value chain is doing the same thing – from farmer to processor/manufacturer, and from wholesaler/distributor to foodservice operator. In a little over three weeks our operators went from 100% to typically 0% to 10% of revenues. As our customers left us in droves, in the machine that is our supply chain, livestock was still being slaughtered, vegetables dug, and products manufactured. Trucks from across the world were heading towards our doors with products destined for our consumers, who of course would never arrive. The resulting fall in order volumes left suppliers (particularly in fresh and chilled products) carrying huge volumes of stock. Even with the supermarket shortages at the time many suppliers simply couldn’t shift the stock and made enormous losses.

A survey, carried out this week by Supply Management magazine, showed more than two-thirds (69%) of procurement and supply chain professionals believed the impact of coronavirus on businesses is getting worse. As a result, 31% of respondents said they had either lengthened on suspended payments to their suppliers. However, 20% had shortened payment times, mirroring retailers such as Morrisons and Sainsbury’s, which have committed to pay suppliers immediately in order to support cash flow.

In our own part of the food sector, we have seen a massive surge of positive action that will support our suppliers, such as Leon’s Feed Britain delivery service offering grocery boxes and ready meals. Brakes and Bidfood have collaborated with the Department for Environment, Food & Rural Affairs to deliver the government’s pledge to the country’s most vulnerable people they will have access to essential food while they self-isolate for 12 weeks. 

Some though have reacted by announcing universal moratoria on supplier payments until branches reopen, with others opting to quietly ignore supplier calls and emails instead. Many would argue this is understandable, as the pressure continues to build on operator cash flow. There is a heavy reliance being placed upon the speed of cash from the government’s Coronavirus Job Retention Scheme after the HMRC portal opens later this month. When added to the fact there is still no certainty about the duration of the lock-down, the temptation to hang on to any cash one has is very strong. 

But this needs to be balanced with the fact we will need our supply community more than ever before when we reopen our doors. Every supplier needs our support, but the enormous number of small and medium-sized enterprises in the food and drink supply chain provide an incredible level of quality, service and innovation – yet are often the most vulnerable. 

We are probably just weeks away from what will likely be a cautious lifting of the social restrictions that have shut down our sector. While we were in close-down mode the supermarkets, with all their logistical might, failed to cope with the surge in demand and get product on the shelves. In hospitality, we need a supply community that is strong enough to cope with a similarly enormous challenge of fast ramp-up when we want to re-supply as we reopen. 

It is surely therefore in our best interests to protect our suppliers (to the extent that we can). We need open conversations between operators and suppliers, good communication, teamwork, collaboration and above all unity. We must surely make good choices with our limited resources in the weeks ahead.

With the country under lock-down, we would like to reiterate our offer of support at this difficult time. We know how incredibly hard it is for you right now. And we want to do all that we practically can to help support the industry. Our sector is in a very difficult period and we are offering free advice to all operators, so please do call David Read, Shaun Allen or David Kelleher direct on the numbers on our website. We are here to help – www.prestige-purchasing.com
David Read is chairman of Prestige Purchasing
Prestige Purchasing is a Propel BeatTheVirus campaign member

Latest on the CJRS by Richard Hartley 

Following a number of updates from the government on the Coronavirus Job Retention Scheme (CJRS) we have updated our advice and want to highlight a few of these points and explain what they mean for operators.

Portal
Following a meeting of the parliamentary select committee, existing guidelines have been updated and will be published shortly. The government is aiming to open the portal on 20 April. It will take four to six days following submission for the money to be paid. Employers will be able to submit claims up to 14 days in advance. Claims may be made before the monthly payroll is run in April, which is great news for operators.

Training
Employees can be asked to complete training while on furlough as long as it doesn’t involve them providing services to, or generating revenue for or on behalf of their organisation. However, when they are doing this training they are entitled to National Minimum Wage (NMW)/National Living Wage (NLW). This means employers would be required to top up an employees’ pay, over what is being support by the CJRS, to ensure for the hours they spend training they are paid NMW/NLW.

This is also the case for apprenticeship programmes (although it is likely you will be topping up to the Apprentice Minimum Wage). It is also worth noting employees are still required to pay the levy and this is not covered by the CJRS.

Holiday
We are in need of clarity from government on the treatment of holiday for furloughed workers.

UKHospitality has stated holiday does not have to accrue throughout the furlough period, if this is part of the furlough agreement with the employee. The Chartered Institute of Personnel and Development (CIPD) argues only contractual holiday (anything above the statutory 28 days) can be varied by agreement and the 28 days that employees are entitled to under Working Time Regulations continue to accrue.

There is also an un-answered question as to whether employees can take holiday when furloughed. Current advice from CIPD is they can but they would be entitled to their full pay so the employer would need to top up to this level. This could be a useful way of employers reducing their liability albeit it presents a current cash challenge.

Calculating pay
For salaried staff this should be their salary on 28 February.

For variable pay staff this should be the higher of their average monthly earnings over the past 12 months or their pay from the comparable month last year. For those employees with less than a year’s service it should be the average monthly earnings while they have been employed with you.

The challenge for many is variable pay workers that are not paid monthly as you will need to interpret the above to give a reasonable assessment of which is the higher. At S4labour we have developed a furlough pay type that will do the calculation on behalf of our customers.

If anyone would like support in calculating furlough pay for their teams then please contact me at Richard@s4labour.co.uk
Richard Hartley is chief product officer at S4Labour 
S4labour is a Propel BeatTheVirus campaign member

Pulling together by Nick Griffin

There’s an urban saying whose acronym SRDH is as much a truism today as it was before the start of the coronavirus pandemic hit. The problem when there are vast amounts of it rolling down the hill is it provides an awful lot of ammunition to be thrown back up. Throw enough and it will stick. 

But these are unprecedented times, and the past three weeks have not only tested the metal of plenty of us it has also shown as a community we can pull together. I know that each Thursday as I stand outside my home and applaud there’s a tear in my eye and pride in a nation that can pull together. As an industry we should take note and indeed I believe many have. Behind the scenes there has been a huge amount of work done and some people have stepped up to the plate. Obvious examples being Kate Nicholls and Jonathan Downey, but they are not the only ones. 

We also need to congratulate those landlords who have grasped the enormity of the position their tenants find themselves in and have cancelled rent payments. At The Licensees Association we have been applauding the roll call of brewers and landlords that have taken this measure for their enlightened approach. We can also measure the goodwill these companies are receiving by the comments of those contacting us to congratulate them. These enlightened companies will be rewarded when their business partner tenants work hard for the mutual benefit when we emerge blinking into the sunlight after this is all over. These companies are the ones who have dammed the torrent of SRDH and dammed it permanently. 

Then there are those companies that have temporarily dammed the torrent. In doing so they are just delaying the inevitable. Indeed in delaying they are exacerbating the problem because their dam will burst – it’s an unpleasant analogy but appropriate. In deferring rents, the clear choice of five of the big six, they are just going to pile more pressure on to their tenants. Any clawback will result in higher rents at the very time when confidence is likely to be low and trade at best interrupted. How does a landlord expect their tenants to pay higher rents with lower turnovers? The tripped-out line, dealing with matters on a case-by-case basis, fools no one, we all know what it is shorthand for. The industry needs certainty, tenants need a vision and a defined strategy so they can plan. If’s, buts and maybe will not cut the mustard. Leadership from landlord bosses is required – they need to step up to the plate like so many others in their peer group and within the industry have done. Comments like those appearing in last week's national press from one unnamed pub company boss about some tenants being better off would be enough to make Marie Antoinette blush as she reached for her Petit Fours. 

But all is not lost. I know from discussions with tenants they will welcome with open arms a change of heart that ensures they can have the confidence to face the future. We all know landlords are businesses too and they have their costs, but they do need to engage. I know The Licensees Association is not alone in offering to help landlords make their case to government for assistance, but their argument to government is hugely undermined if they are furloughing staff and still charging rent. We also recognise it’s a joint effort – help tenants now and they will help you rebuild later. Landlords that have waived rent have already worked this out. 

This wonderful industry of ours has some great minds, very astute business owners and some of the hardest working individuals and their teams at the coal face that we should be righty proud of. Together we can solve this, but only by working together and stopping the SRDH will we have the necessary focus of shared ambition that will allow the industry to properly rebuild.
Nick Griffin is chief executive of The Licensees Association

We will thrive again by Andy Slee

Over the past few weeks, we have all had to reassess the meaning of “important”, so my thoughts go out to any of you directly affected by coronavirus.
 
The content for this article has changed dramatically in the past few weeks. Indeed, at times it has changed by the hour. Never has our industry known a time like it. From the moment the prime minister advised UK citizens not to visit pubs and restaurants, life has been a whirlwind for everyone working in brewing and pubs.
 
The word “unprecedented” has never been used so often by so many. I would like to pay particular tribute to the teams of the two breweries I know best – Black Sheep and Titanic – for the professional way everyone has dealt with their own unique situation in a time of huge personal uncertainty. From what I hear, with the odd exception, similar stoicism has been common in pubs and breweries across the land.
 
British beer and pubs are a force for good in the UK. They support almost a million jobs, contribute £22bn per annum to the Exchequer, but are also the focal point of communities, providing places to meet and be together. Beer is our national drink. 
 
The structure of the industry here is unique globally and provides diversity in every sense of the word. From the big companies offering well-known brands and experiences to small local entrepreneurs who thrive on innovation and community connection. There is space for all and that’s what makes it such a wonderful industry to be part of and support.
 
Sat looking at an empty pub or mashtun, I imagine most are focusing on survival so what next for us? This feels like a real reboot moment for humanity – never mind brewing and pubs – so understanding society is important before being clear on our role.
 
So what do we know?
– Social distancing will be a fact of life for many of our older customers until we have a covid-19 vaccine, and certainty around who has and hasn’t had it
– For the next few years, the short-term lock-down and pub closures may be here again.
– For the millennial generation so crucial to our future, interaction via apps such as Zoom or House Party could well become the norm. We already know a high proportion of them don’t drink.
– It’ll be a good while before there will be the free movement of tourists in and out of the UK.

On the upside I’m sensing increased connection between people and local independent businesses of all types. Those at the heart of their communities will play an important role in bringing us together over the recovery period ahead – music to the ears to most of you reading this.
 
I also have faith in my fellow man to remember those businesses that stood up and helped us get through this crisis and, frankly those who put themselves first and didn’t. I have huge confidence in our ingenuity as an industry to provide beer, ways of reaching drinkers and bars that will attract the customers we need. But to do it we will need the right economic conditions.
 
We’ve heard a lot in recent years about how much government should or shouldn’t interfere in our lives. The state has never been needed as much in our lifetimes and economically it has stepped up to the plate. But let’s be honest, it has us on a life support machine so we will need a recuperation plan to help us thrive.
 
The principle of “in this together” needs to be central to all our thinking. For years, the corporate tax burden has been too skewed in favour of online businesses, which will ironically benefit further from lock-down.
 
Black Sheep Brewery pays almost 40% of its turnover in UK beer duty. That’s four times greater than eBay’s UK corporation tax bill on its declared UK turnover of £200m. Our annual £7m beer duty bill alone is a little under a quarter of Facebook’s total UK tax bill on its turnover of £1.6bn. These facts offend common sense and need to change. All technology giants should pay their fair share to society and this needs to be front and central of any Campaign for Real Ale campaign on how to pay for help for us. 
 
Within the sector, survival of the fittest? Yes, but what does that now mean? Being big merely through deep pockets and large resources is perhaps something that will be seen through more clearly than before.
 
Possibly a 21st century definition of success sees companies evolving with clear purpose that marries social and financial progress. Consistent and appealing behaviour and a commitment to the new definition of community that allows the smaller players that lead innovation chance to thrive again. 
 
It’s the passion of the UK population for beer and pubs that gives me confidence that, with the collaboration between our amazing industry, will help us thrive again.
Andy Slee is chairman of Black Sheep Brewery

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