Rishi Sunak’s £1bn Covid lifeline for hospitality sector ‘will not cover loss of crucial trading’

Rishi Sunak announced a £1billion bailout for the hospitality industry yesterday to help firms hit by a collapse in Christmas bookings.

Businesses struggling because of the Omicron variant will be eligible for one-off grants of up to £6,000.

Taxpayers will also cover statutory sick pay for Covid-related absences for small and medium-sized employers. It came on the day Britain’s debt pile – with more than £400billion already spent on countering the pandemic – hit a record high of more than £2.3trillion.

There was a mixed reaction from businesses to the announcement – with one hotel group boss branding it a ‘dud cracker’. 

The Chancellor said the ‘generous’ grants were comparable to those provided when hospitality businesses were completely closed earlier this year.

And he said it was ‘important to remember we have support already in place that lasts all the way to next spring’ – including a reduced rate of VAT and business rates for the hospitality and tourism sectors. 

Mr Sunak said: ‘We recognise that the spread of the Omicron variant means businesses in the hospitality and leisure sectors are facing huge uncertainty at a crucial time.

‘So we’re stepping in with £1billion of support, including a new grant scheme, the reintroduction of the statutory sick pay rebate scheme and further funding released through the culture recovery fund.’

The statutory sick pay rebate scheme will be open to employers with fewer than 250 employees, and will see them reimbursed for the cost of Covid-related absence for up to two weeks per employee.

Mr Sunak also said an additional £30million would be made available through the culture recovery fund, and more than £100million will be available for local authorities to support other businesses.

This will be a help 

A village pub landlord who lost more than 100 bookings in just over a week after Plan B restrictions were brought in has backed the Chancellor’s ‘helping hand’ to hospitality.

Marc Strzyzewski, 38, runs The Tiger Inn at Turnditch in Derbyshire with his wife Rosie, 30.

They are famous for their Thursday pie nights, boasting some 178 varieties.

‘I was relieved when I heard Rishi’s announcement,’ he said. ‘All restaurants need these grants right now because we are losing business at the most crucial time. The Christmas period usually helps us get through January and February. But we’ve had so many cancellations.’ 

Mr Strzyzewski, whose family have run the rural inn for 22 years, said he had weathered the pandemic well until now after switching to selling takeaways with free delivery.

But with the arrival of winter, takeaway orders began to dwindle leaving the restaurant more reliant on in-house reservations – which plummeted with the arrival of Omicron.

Mr Strzyzewski added: ‘We still need more clarity from the Government. But thanks to this helping hand, we’re in a much better position than we would have been. We are grateful.’

 

But Tim Rumney, chief executive of BWH Hotel Group Great Britain, said the package was ‘like a dud cracker on Christmas Day’.

‘The support is always welcome but it just doesn’t go far enough to help us with the problems that we’re going through,’ he told BBC Radio 4’s PM programme.

The hospitality sector relies on Christmas sales for as much as a third of its yearly income and to tide it over through January and February. 

Critics welcomed the offer of help but argued the £6,000 grants would not be enough.

Jonathan Neame, boss of Britain’s oldest brewer Shepherd Neame, said: ‘We welcome the fact the Government is listening but this seems inadequate to compensate for millions of pounds of lost sales.’ 

Des Gunewardena, who runs the D&D restaurant chain, said £6,000 would not even cover his restaurants’ Christmas decorations. 

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After almost two years of pandemic struggles, Nick and Carrie Smith were looking forward to a busy Christmas period at their board games cafe to ‘put some much-needed money in the bank’.

The Ludoquist cafe, which opened in Croydon, south London, in 2017, has more than 1,500 board games and sells food, drinks and pizza.

But after Omicron hit and the Government advised the public to limit socialising customer numbers dropped off a cliff.

On what would have been the busiest Friday of the year in a space for more than 100 people, they had ‘eight or nine’.

Mr Smith, 54, said last weekend alone they lost more than £6,000. ‘If we are about to be closed down again then the Chancellor needs to think about offering a lot more,’ he said. 

‘I don’t want to be ungrateful, but he is trying to be Santa Claus and actually is being the Grinch.’

 

He added: ‘Many of our larger restaurants lost £100,000-plus from cancellations last week. It’s the same again this week and heaven knows what’s going to happen to our New Year’s Eve.

‘So each of those businesses is facing £200,000-plus losses and has been offered £6,000 which doesn’t even cover the cost of our Christmas decorations.’

The Institute of Directors said the support will be ‘welcome relief’ to many businesses. 

Policy director Dr Roger Barker said: ‘However, with the unwinding of a number of remaining support schemes at the end of Q1 2022, such as the VAT reduction for hospitality and business rates support, businesses also need the reassurance that these measures will now last for longer into 2022.’

Chief economist at the Confederation of British Industry Rain Newton-Smith said that any future lockdown measures must also be matched with further support.

She said: ‘The Government must monitor the situation closely and ensure that any new restrictions go in lock-step with further targeted cashflow support.’