All eyes on Chancellor as business leaders call Budget 'most important day in history of hospitality’

03-Mar-2021 - Last updated on 03-Mar-2021 at 11:03 GMT

Hospitality leaders have implored Rishi Sunak to properly support businesses in today's (3 March) Budget, describing it as 'arguably the most important day in the history of the sector'.

Renewed demands have been made for the Chancellor to confirm extensions of both business rates relief and the VAT cut to 5% for a further 12 months, and for him to address the matter of growing rent arrears being amassed across the sector.

It is understood that close to £3bn in unsettled rent will have accumulated within hospitality by the end of March when the lease forfeiture moratorium, which prevents landlords from repossessing commercial premises if businesses are unable to pay their rent as a result of the Coronavirus pandemic, is currently set to expire.

“Three key asks of the Chancellor are the extension of both business rates and vat reliefs for a further 12 months, and the extension of the rent moratorium with specific guidance on settlement of disputes backed by legislation," says Des Gunewardena, chairman and CEO of high-end restaurant group D&D London.

"There has been a lot of talk about the vat and rates reliefs being extended, but only until Summer when Covid restrictions are lifted - that would be wholly inadequate."

With the benefit of relief extensions, Gunewardena believes the extent of the losses incurred through Covid would take a full year to recoup. However, he warns that without those full-year extensions it will take two years or more.

"If the Chancellor feels the need to be selective in maintaining the reliefs for longer, he must focus on city centres like London which will be the slowest to recover given the collapse of retail, the time it will take for offices to return to work, and due to the likely continuation of restrictions on travel and tourism for some time yet."

Writing in Business Live, Loungers chairman Alex Reilley - who has been a vocal advocate for the sector throughout the crisis - argued that what the Chancellor says and does in today’s announcement 'will demonstrate the importance the Government places on the survival of a large proportion of the sector - and whether the loss of thousands of hospitality businesses and hundreds of thousands more jobs will just go down as regrettable collateral damage'.

He wrote: "We will learn whether this Government truly understands the invaluable role our sector – pubs, bars, cafes, restaurants and hotels – plays in everyday life.

"We will also learn whether the enormous contribution hospitality makes, both economically and in terms of employment, is recognised, and most significantly, respected by the Chancellor."

Concerns over rent

Some support measures, including an extension of the Coronavirus Job Retention Scheme (JRS) until the end of September, have already been announced ahead of the Budget.

At the weekend the Chancellor confirmed that he will unveil a £5bn grant scheme as part of the Budget, which will give hospitality businesses access to one-off payments worth up to £18,000.

"The grant certainly will be a vital boost for small pub owners in towns and villages," says Gunewardena.

"However, central London and other city venues are faced with much higher rents."

D&D mainly operates larger restaurants in the centre of the capital, with some of its venues facing rent bills of over £1m per annum.

"In this context, £18,000 per venue on top of the existing grants are drops in the ocean," he continues.

"In sharp contrast in the US and France we have received grants of $1m and €400k for each of our restaurants. That is why it is vital the Chancellor acts on rents, or significantly increases his property grants to a sum sufficient to contribute meaningfully towards our rents and other fixed operating costs.”

Fears for the night-time economy

For the night-time economy, which has essentially been forced to remain closed since the onset of the first national lockdown in March last year, the Budget is a final lifeline to keep businesses protected until they can hopefully open up in the summer.

In a flash survey of over 200 night-time economy businesses and events, carried out by trade group the Night Time Industries Association (NTIA), 78.8% said they were solely relying on the Budget to survive until they were able to open under the Government roadmap.

"The results of our pre-Budget flash survey reveal many night time economy businesses still in a highly precarious position,” says Michael Kill, CEO of the NTIA.

“We are extremely concerned that the Chancellor's announcement will fall short of what businesses and workers in the night-time economy need to survive. Nothing that has been briefed to the media ahead of the Budget indicates that the Chancellor understands the scale of the catastrophe facing UK nightlife.”

“We urge the Chancellor to recognise that night time economy businesses have been amongst hardest hit by Covid, with many having been closed entirely for the duration of the pandemic."

With 85% of workers in the night time economy considering leaving, Kill adds that the Budget is the 'last chance saloon' to save the livelihoods of workers and freelancers in the sector.

"Without this support, there will be much financial hardship and the wider economic recovery will be held back.”