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Thu 31st Dec 2020 - Opinion Special: Level with us or you will level us

Level with us or you will level us by Mark Wingett

“I promise to do whatever it takes to support our economy through this crisis – and if the situation changes, I will not hesitate to take further action.” A line from earlier this year the chancellor Rishi Sunak remains accountable for. Where’s Rishi has been an increasing lament over social media this festive season. The sector’s “saviour” at the end of March, his lack of profile over the past few weeks – for someone so keen to project the right one – has been alarming for a sector that needs further urgent support if it is to reap the benefits of the next few months’ vaccination programme. 

Like a boxer who gets knocked down and keeps getting up again, we can only keep doing that so many times before permanent damage occurs. Many have stayed down. Many are on the ropes and some will not beat the count. The government continues to preach its message of “levelling up” the country, but at present it is levelling to the ground whole swathes of the hospitality industry with its inaction. Rishi’s initial package of support did not compensate for the destruction of businesses in the summer, never mind Christmas. He now needs to level with the sector, he needs to provide a route map for recovery and support not just for the next quarter but for the next two years. He and the government can’t keep hiding behind the list of “support measures” they claim to have provided the sector, it has been disproportionate and insulting to an industry that could and should play a key role in helping the country get economically and psychologically back on its feet. As Mojo Bars founder Martin Greenhow highlighted this week – “the current situation is an injustice perpetrated against you and against our entire industry”.

But yet we are told repeatedly from the government it is listening to us, continually talking to the sector. On Tuesday (29 December), a number of leading sector players had its regular catch-up with government representatives, including Paul Scully, minister for small businesses. However, amidst the obvious anger and frustration conveyed by operators, from what I gather there was no indication of how the latest tier announcement would go. Yet from midnight on Thursday (31 December), the whole hospitality sector was closed for dine or drink in. The only people in the entire country who can go to the pub are the circa 2,100 people who live on the Isles of Scilly, I’m surely not alone in envying them. Given nine hours’ notice to cancel more bookings, throw away more food and drink. As Matt Snell, chief executive of Gusto Restaurants, tweeted: “No can tell me they didn’t know this yesterday. Tens of thousands of pounds worth of stock down the toilet. AGAIN. Any compensation? Not a chance and @RishiSunak nowhere to be seen. #deathofasector.” These are decisions that are threatening livelihoods and sadly in some cases lives, made and implemented without the government batting an eyelid to the impact they will make both in the short and long-term. But should we by now expect any different? Do we need any more evidence this government doesn’t understand the sector?

Perhaps even more importantly, we can’t allow the public to acquiesce to or believe this to be true. The fight for the hearts and minds of the public needs to be ramped up. As Loungers chairman Alex Reilley recently tweeted: “If the government and most importantly the British public want their favourite pub or favourite restaurant to be there on the other side of this (not to mention if they ever want to dance at a club ever again) we need more help.” The problem, and a continual one, is perception. As I have written about previously, the perception remains of a sector that is a second-class citizen to other parts of industry. I would argue the public also finds it hard to quantify how serious the problem is for the hospitality sector, even before you start factoring in whether it believes pubs, restaurants etc are being properly supported. When an “iconic” high-street brand name falls – Topshop, Debenhams, Woolworths – it stirs an emotional response, especially from certain generations. Here is a name that resonates. What would be the equivalent in our sector – McDonald’s, Nando’s? I would argue the impact of the crisis on Pret A Manger has come closest to generating something close to an emotive response (good or bad), but that is not one that is felt nationwide. Five years ago, Marston’s chief executive Ralph Findlay used part of his presentation at an industry event to talk about branding. He put forward the idea the Great British pub is the sector’s biggest brand – it has value and is enduring, but it is not a chain. It’s appeal therefore is hard to quantify. When numbers around how many pubs have and will close, it is therefore hard for the public to get a handle on what that means. Sadly, some will only realise what has gone, what has been lost – the heart of many communities – when this is all over and that local pub doesn’t reopen and will be left to just say “oh, but I thought you had received support!”

Reilley highlighted said support in a twitter thread this week, and it is worth repeating here: “On furlough – wonderful initiative for hospitality staff but employers have to pay employers national insurance and pension contributions. If your business has been ordered to close you have no revenue so this is a cost to your business not a benefit. VAT cut – only applies to food so if you’re a traditional wet-led pub this doesn’t help in the slightest. Also, totally irrelevant if you’ve been ordered to close. Business rates holiday – why the hell should you have to pay rates if you’ve been ordered to close? CBILS loans – why should businesses be expected to take on debt when they have been ordered to close? Grants – in the great majority of cases won’t even cover the cost of furlough let alone other outgoings. Hospitality has been ordered to close and needs to be compensated. Debt moratorium – the great big elephant in the room. Nothing but a phoney war at present and a ‘sort it out among yourselves’ directive from the government. Once lifted watch the landlords unleash their dogs – expect a tidal wave of winding-up petitions to be served. Every time the hospitality sector asks for more help the government wheel out this list of ‘support’ measures. Don’t get me wrong we’re grateful for furlough and the fact it’s kept our teams together but this is simply not enough for the great majority of businesses in our sector.” Last week, JD Wetherspoon chairman Tim Martin told Propel unless the hearts and minds of customers are won over, this “heartless government’s propaganda machine will put us all out of business”. Martin said: “Wetherspoon is trying to achieve this by a magazine (available on Wetherspoon’s website) on every table in every pub, with comments from doctors and scientists, which criticise government policies – and make the case for hospitality.” Perhaps, some of Reilley’s points on what support the sector has received could be used as part of a campaign to educate consumers. At the start of the crisis, UKHospitality produced an excellent one-page summary on what the industry contributes to employment and the economy, it should be posted through letterboxes throughout the land. Nothing else seems to be working.

The majority of the sector will start the year, as it spent most of 2020, in some form of lockdown. As David McDowall, chief operating officer at BrewDog, tweeted: “It’s a brutal truth tens of thousands of businesses, and millions of livelihoods, move into 2021 hanging by a thread.” How quickly the government can ramp up its vaccination programme will define how long the sector will remain in purgatory. Now the Oxford vaccine has been approved, the government needs to put every resource it can behind its roll out. It also needs to set out a clear strategy for what that will mean for easing restrictions. There needs to be a roadmap and we need to be kept informed every step of the way. Perhaps this is too much to ask after the PR exercises and rhetoric of the last year, but here again the hospitality sector is willing to get involved. Kate Nicholls, chief executive of UKHospitality, and now deservedly with OBE, said: “Hospitality stands ready to help – we have large empty hotels in rural and town centre locations that are covid secure (they housed and fed front-line workers and convalescent patients), with trained first aiders and plenty of fridges. We can be vaccination stations.”

Many expect the next couple of months will finally witness a bloodbath of business collapses. The government support received has created a false impression of the health of the sector – many businesses are simply being propped up, zombies with no way of limping up to or through a recovery stage. Many of those that get through to the other side will have to trade with the parachute of loan repayments/higher debt dragging them back for years to come. Next Easter has become the new Rubicon, following last September and this Christmas – all dates when we were promised things would be better. The prime minister Boris Johnson, fresh from his Brexit “triumph” said on Wednesday afternoon (30 December) that many interventions – such as the closure of hospitality – will “recede into the past”, if the vaccine programme is as effective as expected. Nicholls countered: “If we are not careful much of hospitality will recede into the past as without support many are facing imminent collapse.”

Writing earlier this month in the Mail on Sunday, Sunak said next year would begin a “new era” for the nation as he pledged to invest in infrastructure and reward “risk-takers and entrepreneurs”. He said: “I want next year to be the start of something much more meaningful for all of us – a moment to look afresh at the world and the opportunities it presents, and to consider how to take advantage of them.” What about all the entrepreneurs and risk takers that are currently seeing years of hard work be destroyed before their eyes? That invested even further in their businesses to get this far through the crisis? And those that made your Eat Out To Help Out scheme such as success? This should be the time of year when everyone looks at the move into a new year, with a sense of hope. News of the Oxford vaccine being approved should have provided that, only for its shine to be tainted only hours later as another tier change was announced without accompanying support for further swathes of operators now closed for the foreseeable future. It will cost The Treasury a lot more to do nothing now and to echo a much-made point – if we are to play any kind of role in the economic recovery there has to be something left of our sector first. Think tank Resolution Foundation thinks emerging from covid restrictions will release a tidal wave of cash saved by people who have been stuck at home. That money needs to flow back into pubs, restaurants and the high street. 

But for that to happen, and to borrow some sadly overused words from this year, Rishi needs to get out of his bubble, pivot toward proportionate support for the sector, and give it the unprecedented assistance it needs. Committing right now to keeping VAT low (and perhaps extending it to wet-led sites – yes I know probably overstretching here) and to a business rates holiday in 2021 would be a start the sector could at least cling on to. It is your round again Rishi, its time at the bar in the Last Chance Saloon and you need to make this one count. If you don’t there’s going to be business failing on an apocalyptic scale.
Mark Wingett is Propel insights editor

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