Disappointment as Spending Review fails to deliver targeted support for hospitality

In a sobering address to the House of Commons earlier today (25 November), Rishi Sunak said the Government will borrow a peacetime record of almost £400bn this year as it seeks to combat the worst recession in more than 300 years.

He described the UK as facing an 'economic emergency' as he confirmed plans to cut international aid and impose a public sector pay freeze for millions.

Forecasts from the Office for Budget Responsibility (OBR), updated to take account of the second lockdown in England and tougher restrictions in Scotland, Wales and Northern Ireland, show the economy will drop by 11.3% this year and take until the end of 2022 to recover to pre-pandemic levels.

Setting out his Spending Review to MPs, the Chancellor said the National Living Wage would increase by 2.2% to £8.91 an hour from April 2021 - lower than the £9.21 rate previously expected - and will be extended to 23 and 24 year olds for the first time.

He also announced a freeze to the business rates multiplier.

According to The Treasury, the freezing of the multiplier at this year’s level of 51.2p per pound of rateable value - or 49.9p for small firms - will save businesses in England £575m over the next five years.

The Government is also 'considering options for further Covid-19 related support through business rates reliefs', with plans to be set out in the new year.

During his address, Sunak said his immediate priority was to protect people’s lives and livelihoods as the country continues to battle the Coronavirus outbreak.

With unemployment set to rise to 7.5% next year, the Chancellor committed £2.9bn towards a new three-year 'restart programme' to help more than one million people who have been out of work for more than 12 months find new jobs.

However, responding to the Chancellor's announcement, the British Beer & Pub Association (BBPA) said the Chancellor’s decision to invest in new jobs, but not do more to save thousands of pub jobs that already exist was ‘staggering’.  

With the tightening of restrictions​​ and no additional support given to the sector today by the Chancellor, the trade association said thousands of pub closures and job losses were now inevitable unless the Government delivers the support businesses need as a matter of urgency.  

“The lack of action by the Chancellor to save pubs and jobs by giving them the proper support they need is staggering," said Emma McClarkin, chief executive of the BBPA.

“Not only is the Government unfairly rendering pubs unviable or forcing many of them to stay closed this Christmas, it isn’t even giving them the full financial support they need to survive. Whilst the news of a review of business rates reliefs in the New Year is a glimmer of positive news, it is not nearly enough.

“If our sector isn’t allowed to trade properly, or at all, how on earth can the Chancellor expect it to survive and protect the livelihoods of the thousands of people working in it? Adequate grants need to be given to pubs urgently or they simply won’t survive the new tier restrictions or Christmas.”

Meanwhile, UKHospitality warned that many of the sector’s workers are unlikely to benefit from an increase in the living wage as tough winter restrictions risk thousands of job losses.

The trade body reiterated that hospitality jobs can catalyse the UK’s economic recovery and avoid predicted unemployment growth, but only if it is supported to navigate a harsh winter.

“Hospitality jobs are at the core of the grave unemployment forecasts the Chancellor announced today, yet the sector has shown repeatedly, most recently in August, how those jobs can help deliver economic growth for the economy," said Kate Nicholls, UKHospitality chief executive.

"But it can only do so if it survives the winter, and that means getting the necessary support now. The increase to the National Minimum Wage will be a great benefit to many workers in our sector only if the businesses that employ them are still around.

“The hospitality sector is key in preventing unemployment getting out of control. The sector is being hit hardest by this crisis, but it is also the sector which could lead the recovery of the economy if given the chance. As demonstrated after the financial crisis in 2008, we can provide jobs, investment and opportunities in every region of the UK and the economy back up to full speed.

"Once the crisis has passed, people will want to go out for a drink or a meal, take a holiday or enjoy their newly gained freedom with their family and friends. Hospitality is central to all of this.

“We can only deliver the growth that the Treasury desperately needs if we survive the winter. If hospitality does not get the support it needs right now, businesses will fold and jobs will be lost.

"That is not just a disaster in the short term, it undermines the efforts to recover next year and into 2022.

"We have already lost 600,000 jobs. Support must be comprehensive and swift if we want to stop that figure from rising and avoid the nightmare of unemployment the Chancellor spoke of.

“A swift announcement to fill the gap in hospitality previously filled by the Job Retention Bonus, coupled with a solution on rents, is critical for immediate survival.

"Subsequent revival will be hugely benefited by then extending the VAT cut and the business rates holiday. Every venue that we can save now means jobs safe and secure as we look to rebuild.”