Budget's intention to support sector 'misdirected'

Operators from across the hospitality industry have been reacting to the chancellor's Budget announcement on 3 March.

The government's plans to aid the UK's economic recovery from the pandemic include extending the business rates holiday, the 5% reduced rate of VAT and the furlough scheme - full details can be read here. 

As expected, there are mixed views on Rishi Sunak's approach to support, with sector figures noting measures are 'misdirected' and should take into account whether Covid-19 restrictions are lifted as planned. 

Trade body UKHospitality pointed to the issue of outstanding rent debt being the 'biggest gap in support': "We need the government to announce an extension of the moratoria at the earliest opportunity and work with industry to establish a landing zone to resolve this £2bn millstone around our recovery," says the organisation's chief executive Kate Nicholls.

"It is vital that the government sticks to its date of 21 June for a full reopening of the sector. Delay would see more businesses fail, more jobs lost and undo much of the good work the chancellor has done to date.”

With many restaurants transforming their food operations to meet virtual and delivered consumer demands, some believe this should have been factored in to Sunak's statement. 

“The measures announced are welcome, but don’t reflect the reality of today’s hospitality sector, for two reasons," comments Salima Vellani, founder and CEO of Absurd Bird and Kbox Global. "First, by supporting an outdated model reliant on bricks and mortar and second, by failing to address the challenges that businesses are facing in the medium- to long-term.

“The massive shift to online food delivery, needs reflecting in any fiscal support. Restaurants, pubs and cafes need to know they are on a level playing field with ecommerce competitors who are benefiting from all of the gains without the huge costs of bricks and mortar.

“Secondly, the extended VAT reduction is simply a short term prop. Most of the sector are SMEs, for whom rents, and business rates are the biggest drag on their profitability. With 50% of businesses facing closure, most would prefer rent support and an overhaul of the business rates system.

“The intention to support the sector is there, but its misdirected, and unless it is addressed, it won’t do much to avoid redundancies, closures and desolate high streets.”

Others were more positive about the measures intended to grow UK business.

"I really like the idea of the super deduction for investment," says Jack Stein, chef director for Rick Stein Restaurants. "This will definitely stimulate our sector as hospitality looks to reopen. From investment in outdoor spaces to kitchen equipment this is a really positive step."

Most could agree the extension of the furlough scheme provides welcome relief, though there are concerns about business rates and the VAT cut.

"I think the extension of the furlough scheme is terrific and will certainly assist moving forward, as we begin to slowly open up the businesses," notes Stuart Proctor, cheif operating officer of The Stafford Collection. "With regards to the VAT cut extension and cut in business rates, of course that is of huge help to us, however it would have been far more useful to have this running throughout the whole of 2021."

"The extension of the furlough will allow the labour flexibility needed as consumer confidence is recovered. It is also long enough to allow for the still uncertain short term," adds Marcos Fernandez, managing director of Ibérica Restaurants and Arros QD. "A slightly longer extension to the business rates [holiday] would have been welcomed to build up the cash reserves necessary to be able to honour our lease payment terms, which bring me to the still ongoing problem of rents due which hang over many businesses which have not been tackled and will ultimately make viable businesses fail through the cash flow when the legal containment is lifted."