Budget delivers ‘crucial support at a critical time’ – but long-term solutions lacking

The hospitality sector has broadly welcomed the chancellor’s Budget this afternoon, which delivered extensions to the VAT cut, business rates holiday and furlough scheme over the coming months but lacked long-term solutions for problems such as rent.

 

Zim Braai restaurateur Andy Lennox, who has been campaigning for the VAT cut to be extended, said Rishi Sunak’s Budget “answers the key business demands” and appeared to be “progressive and exciting”.

 

Stosie Madi, chef-patron of Parkers Arms in Newton-in-Bowland, Lancashire, said: “My only concern now is that when we do reopen after the outdoor opening restrictions, that we are just allowed to get on with it and trade, that we don’t face any further restrictions and lockdowns.

 

“But I’m positive. We’ve opened bookings for May and they are coming in thick and fast. That in itself is giving me encouragement.”

 

However, London-based Chantelle Nicholson, who oversees Tredwells and All’s Well restaurants in Covent Garden and Hackney, respectively, was more cautious.

 

“While it has confirmed a couple of things, it’s also left a lot of uncertainty… Nothing’s really clear about how, what, when?” she said. “Having any form of business rates for restaurants from July onwards is a bit of a blow. That’s going to make things very challenging.”

 

She added that restaurants would ultimately see limited benefit from the VAT cut, having been closed for so much of the last year. She said she would have liked for it to have been extended to what will hopefully be a good trading period this December.

 

Nicholas Russell, managing director of Balbirnie House in Fife, said that a return to 20% VAT at all for tourism was “the wrong decision for the entire hospitality sector”.

 

“A great majority of Scotland’s MPs have previously stated their support for a permanent reduction; in Scotland’s hospitality context it’s regrettable that decision is reserved to Westminster,” he added.

 

Nicholson was also more reserved in welcoming the extension of furlough, describing it as a “double-edged sword”.

 

“Although I’m grateful that they’ve extended it in its current guise until the end of June, it does slightly worry me that they’ve done it until the end of September in terms of what could be coming and if there are any future lockdowns,” she said.

 

Philip Inzani, founder of Polo 24 Hour bar opposite London’s Liverpool Street Station, questioned whether sales will have recovered enough for employers to contribute 20% towards the scheme from August and emphasised the need for a long-term plan for the industry.

 

“This pandemic has shown the fragility of the hospitality industry and how we’re reliant on very tight margins. This needs to change in order for our sector to fully recover,” he said.

 

Sam Morgan, chief executive of We Are Craft Group which owns and operates Craft, 8 and Artisan Street Kitchen in Birmingham, said: “The chancellor has to now commit to wholesale policy change in this area as it’s vital to strengthen business return to the high street."

 

He also said the chancellor should commit to a review of VAT on fresh food production as the standard 20% rate has “crippled” the sector and meant businesses were not able to build viable cash reserves to protect them against unforeseen circumstances such as the pandemic.

 

“A permanent reduced rate of VAT for hospitality would redress the unfair tax imbalance that our businesses have faced for too long and make us internationally competitive,” said UKHospitality chief executive Kate Nicholls.

 

However, she added that the rent issue was 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 £2b millstone around our recovery,” she said.

 

Marcos Fernandez, managing director of Iberica Restaurants and Arros QD, said the problem will “make viable businesses fail” when the moratorium is lifted at the end of March if it is not tackled.

 

Big Mamma Group co-founder Victor Lugger added: “It is one thing to care for hospitality, another thing to care for London hospitality. We have extremely high rents, being one of the most expensive cities in the world, and there has been no long-term government protection, and zero offer to help with landlord negotiations.”

 

Photo: Number 10, Flickr