Rishi Sunak dropped out of California and flew back to the UK on Thursday evening after angry business leaders asked him to put together a financial aid package to help them survive a trade slump attributed to mixed government messages.
The Chancellor said he had spoken to representatives of the severely affected hospitality industry and announced that he would consider measures to keep companies afloat amid a spate of cancellations.
Hospitality figures had previously accused the government of turning away from troubled businesses by “intimidating” people into staying at home while failing to provide support to venues hit by the ensuing trade slump.
The pub industry reported 3.2 million cancellations last week alone and forecast 37 million fewer pints to sell, costing £ 237 million. The UKHospitality trade association estimated the cost to the entire industry at $ 4 billion.
Pub and restaurant bosses warned companies would not survive the winter without an urgent package of financial support from the Treasury Department, calling for measures such as:
An extension of the VAT cut for the hospitality industry.
Extension of the relief to business tariffs.
Emergency aid for troubled companies.
Greater government support for the CBILS loan program.
Targeted return of the vacation plan.
Many blamed a change in messaging amid the proliferation of the Omicron variant.
At a somber press conference on Wednesday, Prof. Chris Whitty, England’s Chief Medical Officer, told the public, “Don’t mingle with people you don’t have to.” His tone contrasted sharply with that of Prime Minister Boris Johnson, who continued to insist that Christmas celebrations take place, and proclaimed that as the booster jab program accelerated, “a great national battle has begun”.
Chris Jowsey, the CEO of 1,000-member pub chain Admiral Taverns, said, “They scare everyone into staying home, but they offer no support to the businesses that are hardest hit.”
He said city center revenues fell by as much as 70% after a wave of cancellations sparked by work from home and Whitty’s comments on socializing left businesses in dire need of a support package. “We didn’t hear from the Chancellor and she must have known what the impact would be. It feels like they’ve turned their backs on the industry. If this continues, we’ll see companies go under in January. Fact.”
The British Beer and Pub Association reportedly wrote to Sunak about the troubles in the sector, which the trade organization said had suffered 3.2 million cancellations last week before Whitty’s comments.
Phil Urban, the chairman of the board of directors at Mitchells & Butlers, which has 1,700 restaurants and pubs including the O’Neills and Harvester chains, called for the Treasury to move faster. “In Germany, where we have a business, restrictions go hand in hand with support,” he said. “Here we have restrictions and are left dangling without knowing whether we are getting anything at all.”
Sector leaders urged the government to reconsider its plans to raise the hospitality tax rate to 20% in April and called for it to stay at its current rate of 12.5% or return to 5%.
The other key industry demand is a full moratorium on business tariffs as many companies, especially in city centers, pay tariffs in places where trade has declined. The bosses also called for immediate grants to help the sector and strengthen the government-backed coronavirus business interruption loan program.
Simon Emeny, the head of the London pub chain Fuller, Smith & Turner, called for some form of targeted vacation to help venues in abandoned city centers. “We were left in no man’s land,” he said.
When the industry called for action from the Treasury Department, Boris Johnson’s official spokesman appeared to indicate that the government was keen to provide more financial aid to affected companies. “We’ll listen. We understand the challenges this new wave brings and recognize that the public is more cautious as this variant spreads. Therefore, as before, we will always react proportionately, ”he said.
Although he emphasized that the Prime Minister did not call for companies to close, he said: “We are aware that the spread of this variant and its high transferability pose further challenges, especially for the hospitality industry.”
Speaking virtually to businesses from California on Thursday, Sunak said on his Twitter account that he would continue talks before the weekend and said he was listening to their concerns.
A Sunak spokesman said his trip was long-planned and said he had traveled with a “busy schedule” to meet technology and investment leaders. Sunak was originally due to return on Saturday, according to the BBC.
Conservative MPs made it clear that they want more money from the Treasury Department and accused the government of having an “effective lockdown”. Steve Brine, a former health minister, said at the news conference on Wednesday that “the chief medical officer has changed government policy in one fell swoop,” arguing, “the Treasury Department will have to do more.”
Wes Streeting, the shadow health minister, had previously urged Sunak to return from California and “get the situation under control because companies now need certainty and confidence”.
Streeting urged Sunak and business secretary Kwasi Kwarteng to “negotiate a deal to help the hospitality industry because they really need us now.”