Boris Johnson will put up to 1 million jobs at risk if he fails to name a date for the reopening of pubs, restaurants and other hospitality venues when he unveils his roadmap out of lockdown on Monday, industry sources have warned.
Trade body UK Hospitality said it had received indications from government that the prime minister would not even commit to a date for reopening in a particular month, but that he would tie the return of customers to data on Covid infections and hospitalisations or vaccine take-up.
The group’s chief executive, Kate Nicholls, told The Independent that businesses from pub chains to nightclubs were “hamstrung” by a lack of clarity from the government about the timing and conditions for reopening and the continuation of financial support.
Uncertainty was “crippling” investment and confidence at a time when only one in five companies has enough cash to survive to the end of March.
Despite widespread speculation that Mr Johnson will set a target date in May for pubs and restaurants to begin the reopening process, the PM dealt a blow to industry hopes on Wednesday by backing a call from his scientific advisers for timings to be based on “data, not dates”.
And the data-driven approach was backed in a report today by the Institute for Government thinktank, which warned that a repeat of last summer’s “mismanaged” relaxation – with schemes like chancellor Rishi Sunak’s Eat Out to Help Out – would undermine recovery and risk forcing England into a fourth lockdown.
IfG senior fellow and report co-author, Catherine Haddon, said easing of controls must be based on “clear metrics” like numbers of cases, hospitalisations and vaccinations and the crucial R rate of virus reproduction.
“The government has a chance to build on the success of its vaccine programme in how it approaches the next phase of Covid,” said Dr Haddon. “But it needs to reassure the public that it won’t repeat the problems that have dogged its strategies in the past. A successful lockdown lifting is not just about producing a ‘roadmap’; it is about how you safely navigate the journey”
Writing in The Independent, IFG chief economist Gemma Tetlow said the critical factor in the success of the recovery package is ensuring that Mr Sunak’s approach in his 3 March Budget is “aligned with that set out by the prime minister”. Failing to do so “could undermine the whole plan”, she warned.
Treasury initiatives such as Eat Out to Help Out were “mistimed or inconsistent with other government initiatives” aimed at suppressing the virus, while Mr Sunak’s attempts to wind down furlough last autumn were too slow to adapt to the surge in infections as new variants emerged, said the IFG report.
Dr Tetlow warned: “Having mismanaged the attempts to roll back social and economic restrictions last year, the prime minister cannot afford to stumble again – doing so, and risking a fourth lockdown, would be a serious failure of government.”
Ms Nicholls said that hospitality needs “clarity, certainty and a really clear exit strategy” on Monday.
Ideally, the sector is looking for a set date for reopening and for the eventual removal of social-distancing restrictions, coupled with the extension of schemes such as furlough, business rates relief, rent moratoriums and the emergency 5-per cent VAT rate until April 2022. “Second best” would be indicative dates, subject to progress in driving down Covid-19.
But she said indications from government were that decisions on extending financial support will be held back until the Budget, and that Mr Johnson would stick to his “data not dates” approach.
“Our big fear is that we’re not going to get clarity on Monday,” said Ms Nicholls. “That would just mean that businesses can’t plan at all. And I think that if that’s the scenario, you will accelerate decisions about redundancies and ultimate business administrations.
“We are not anticipating getting the level of precise detail that we would need to be able to reinject confidence into the sector. All we can do is to urge the government to work at pace to provide that.”
Surveys showed that a third of hospitality premises, ranging from restaurants, pubs and hotels to visitor attractions and coffee shops, are risk of permanent closure over the course of 2021, said Ms Nicholls. And some may not be able to hold on until Mr Sunak’s Budget, she warned.
“There are very difficult decisions that will have to be made over the next few weeks,” said Ms Nicholls. “And unfortunately, businesses are going to have to make those probably on partial information.
“Business rates relief, VAT, rent moratoriums, all come to an end on 31 March. The fact that we don’t know what happens to those after 31 March and we don’t know when we’re reopening and under what conditions creates a crunch around confidence, because nobody will lend to you, nobody will give you more money to get through this crisis.”
As many as 1 million of the sector’s 3.2 million jobs are at risk, with more in danger in the supply chain, including food and drink suppliers and laundries, she warned.
And she said that closures on a large scale could devastate town and city centres across the country, with the vibrant pre-Covid food, drink and nightlife scene taking as long as a decade to re-establish.
“If you’re closing a pub or restaurant, you’re losing a community asset,” she said. “In the high street, you’ve already lost swathes of retail estate, and you’ve got lots of vacancies. So you can see easily how high streets and town centres start to die off. Hospitality literally brings light and life to those town centres.”
Even with the current financial support package, hospitality is burning through £500m a month to stay closed, she said. And the experience of last summer showed that no businesses could do more than break even with partial reopening under restrictions.
Businesses which have invested an average £20,000 per site on Covid security measures see no reason why they cannot reopen safely in April, said Ms Nicholls.
“The later after Easter the government leaves it, the more likely we are to see business failures and redundancies,” she said. “If we’re going into the summer with heavy restrictions in place, it’s inevitable that we will see large scale failures.”
In a message to Mr Johnson, she said: “My main point to the government is that if they want to have a recovery at pace and deliver jobs, growth and investment across all parts of the country at pace, the best way to do that is to support hospitality, because that’s the sector of the economy that will do that for them.
“In 2019, we were forecast to grow 5 per cent year on year. We were one of the few sectors of the economy that was in growth; we were generating one in six of net new jobs. And we were investing £10 billion in the high street.
“It’s not just our sector that will be hampered if we don’t get the clarity we need – it’s the whole of Britain’s high streets, communities, town centres, national growth, our tourism industry. That’s all damaged if you irreparably damage the hospitality sector. And we will take at least a decade to recover.”
