Coronavirus poses existential threat, says hospitality industry

Restaurant, pub and bar operators have said the government risks triggering hundreds of thousands of job losses and thousands of closures across Britain unless it provides urgent financial support to the industry after Boris Johnson advised the public to stay away from them under new coronavirus restrictions.

Sounding the alarm after the prime minister told the public to avoid pubs, clubs, theatres and other social venues, business groups said the UK’s hospitality sector faced an existential threat that could severely damage a significant employer and driver of economic growth.

Kate Nicholls, chief executive of UK Hospitality, which represents the industry, said: “The government has effectively shut the hospitality industry without any support, and this announcement will lead to thousands of businesses closing their doors for good, and hundreds of thousands of job losses.”

Emma McClarkin, chief executive of the British Beer & Pub Association, said: “The very existence of some pubs is now at threat. The government must urgently step in and provide a package of support for our sector.”

Johnson also indicated the government might enforce closures if the “very strong advice” to stay away from public spaces is not followed. “As for enforcement, we have the powers if necessary but I don’t believe it will be necessary to use those powers,” he said at a Downing Street press conference.

Britain’s hospitality industry contributes more than £120bn a year to the economy and is worth more than the automotive, pharmaceuticals and aeronautics industries combined. As the third-largest sector for employment, more than 3.2 million people work in pubs, restaurants and other outlets. A further 2.8 million work in the wider supply chain.

Michael Kill, chief executive of the Night Time Industries Association, which represents nightclubs, bars, live music venues and pubs, said jobs would be at risk across the country: “The industry feel like we’ve been hung out to dry. We’re happy to take into account public safety but we also have to consider the survival of businesses.

“It will have a devastating impact on an industry worth billions of pounds to the economy. It’s taken years of growth and entrepreneurial spirit to get to this point, and now what’s happening is the government has turned its back on us.”

Gareth Bentham, a joint pub landlord in Altrincham, said he and thousands of other landlords won’t be able to claim for the coronavirus outbreak on business interruption insurance.

“Because the prime minister is just advising the public not to go to pubs and restaurants, our insurance won’t cover us. If he had said that we cannot open, then we would have been able to claim. But this has left us in limbo and struggling to cover our costs and overheads without any insurance cover. It is not good enough,” said Bentham from the Old Roebuck pub.

The warnings come as Britain’s foremost business lobby group, the Confederation of British Industry, urged ministers to come up with more ambitious plans to provide immediate help to struggling companies.

“There will be an immediate cost – but the cost of inaction will be far greater,” Carolyn Fairbairn, director general of the CBI told the Guardian. “Some of our largest companies and biggest employers are at risk, with possible large-scale failures and job losses without fast action.

“Rescue packages will need to be developed and made available instantly, including help in paying wages and relief on taxes, for example by extending business rates deferrals to larger firms.”

Trade unions urged the government to consider taking financial stakes in airlines and airports to ensure their survival, as well as subsidies, tax breaks and emergency loans.

As the situation rapidly escalates, business leaders said the Bank of England cutting interest rates close to zero and the government announcing £12bn of emergency funding for the coronavirus outbreak at last week’s budget had quickly been eclipsed by events.

UK Hospitality, the trade body for leisure companies, said the budget measures were “helpful but do not go nearly far enough to support the vast majority of hospitality businesses who are in the eye of the storm”.

Paul Johnson, director of the Institute for Fiscal Studies, told MPs on the Treasury committee: “At the time they were drawn together they may have looked like the right sort of scale. But it’s become clear even in the last week that the scale of the impact is going to be bigger than it appeared to be previously.”

Rishi Sunak, the chancellor, had said at the budget the government would provide further support if necessary and do “whatever it takes” to protect households and businesses. Johnson added: “The chancellor said he would come back and do more if need be, and I’d be astonished if he didn’t.”

The budget included relief on business rates – a levy paid by companies on the properties they use – being extended to all small retailers, hospitality and leisure firms covering almost half of all business premises.

Amid the prospect of vast numbers of workers taking time off due to illness, firms with fewer than 250 staff are also eligible for government refunds for their sick-pay bills. Although being prepared for launch as soon as possible, the Treasury admitted it would only be ready after “work with employers over the coming months”.

Small firms form the backbone of the British economy, together employing an estimated 16.6 million workers, about 60% of the overall workforce. However, the CBI warned the nation’s 8,000 large firms, which employ more than 10.8 million staff and account for 40% of jobs, also need support to prevent mass unemployment.

Fairbairn added: “Firms large and small know the combination of dipping demand and disruption in supply is a perfect storm for cashflow.”

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