Chancellor announces £1bn support for hospitality sector and SMEs

Small business and hospitality sector leaders have welcomed £1bn of additional support pledged today (December 21) by Chancellor Rishi Sunak.

They had expressed fears for thousands of bars and restaurants which face a sustained period of uncertainty after the Government introduced its ‘Plan B’ to help fight the Omicron surge.

However, this led to a wave of party and dining cancellations and reduced footfall as the public responded to calls by health officials to limit their social interactions.

But this afternoon, Rishi Sunak announced an additional £1bn in financial support, with businesses able to claim a one-off cash grant of £6,000.

The Treasury is also providing a £30m top-up to the Cultural Recovery Fund – which supports institutions such as museums and theatres – and reintroducing the Statutory Sick Pay Rebate Scheme which allows small and medium-sized companies to claim compensation from the Government for the cost of their employees’ sick pay.

Mr Sunak said: “The grants that I’ve outlined, up to £6,000, are comparable to the grants that we provided for hospitality businesses when they were completely closed earlier this year – so there is a benchmark for you.”

He said support, including the reduced rate of VAT for the hospitality and tourism sectors, lasts all the way into next spring.

The Treasury said around 200,000 UK businesses will be eligible for the business grants which will be administered by local authorities in the coming weeks.

Federation of Small Businesses (FSB) development manager for Greater Manchester, Robert Downes, said: “These positive measures will help alleviate the intense pressures small firms are currently under, and hopefully arrest a significant decline in confidence over this year.

“With the prospect of one million people sick or self-isolating by January, we encouraged the Chancellor to bring back the COVID statutory sick pay rebate. We’re really pleased to see our recommendation taken forward.

“Not only will this move reduce stress for small employers up and down the country, it will help those who are struggling most with depleted cashflow. It’s vital small firms – once again up against a massively disrupted festive season – can reclaim the costs of supporting staff.”

He added: “The Government has also rightly taken forward other aspects of our 10-point plan, with £1bn-worth of grant support for the hardest hit sectors, alongside accelerated delivery of the business rates relief fund for supply chains launched months ago.

“The encouragement of HMRC to give as much breathing space as possible to small firms as we head towards tax return season will also come as a relief to many.

“We’ve always said that support needs to move in lockstep with restrictions, and this intervention will help give small businesses confidence that this is the approach government will be taking.”

Paul Cherpeau, chief executive of Liverpool Chamber, said: “This latest support package from the Chancellor will provide an enormously welcome relief for businesses in leisure and hospitality, which have seen a potentially disastrous decline in custom over the past few weeks.

“We are pleased that the Government has heard our calls for additional grant funding for businesses in those sectors and we would also urge them to extend support to operators in the live events supply chain, which have also suffered significantly during December.

“Greater flexibility on tax payments means businesses can have some breathing space and the measures around sick pay will give operators greater confidence to keep going if and when key members of their team test positive for the virus.”

He added: “It is important now that this support reaches affected businesses as swiftly and efficiently as possible in order to minimise the severity of the damage they are experiencing and ensure the impact does not become terminal.”

However, one businesswoman was distinctly unimpressed by the latest hand-out, or previous levels of support, from the Chancellor.

Dominic and Fiona Hornsby and Ian Forster. Pic: Ray Farley

Fiona Hornsby, proprietor of The Bridewell and Denbigh Castle pubs in Liverpool city centre, said the £6,000 grant is misleading, adding it is governed by the rateable value of a business.

She said the support is spread between three rateable values of up to £15,000, £15,000-£51,000, and £51,000 and above.

Fiona said: “The Denbigh Castle has a rateable value of below £15,000 and The Bridewell is in the next band up, so we won’t get £6,000. It’s likely to be between £1,500 to £2,000 for the Denbigh, and £3-£4,000 for The Bridewell, which is not generous.

“If we stay open it’s lovely, but if we get closed, it doesn’t touch the sides.”

She also criticised the Chancellor’s claim that the VAT reduction helps the industry, saying: “The VAT cut doesn’t apply to alcohol, only food, so it doesn’t benefit us as a wet-led pub.”

Iain Hoskins, the owner of Ma Pub Group, with the waterfront Ma Boyle’s Alehouse & Eatery and Tempest, on Tithebarn Street, Liverpool, said: “Well, it’s a start at least – our industry has been asking this question for weeks. So it appears without furlough for now the plan is to let us stay open but the reality remains that trade has dropped hugely at the busiest time of the year for hospitality. It’s devastating.

“The point is that it costs me more to stay open than when we are closed and while I don’t think anyone is expecting to have all lost Christmas sales reimbursed by the Government, the £6k grant is a drop in the ocean at this time of year. That’s not being ungrateful – that’s the truth.”

He added: “But it’s a start if follow-up packages are to come after Xmas. But it simply doesn’t go anywhere to address the issue of our staff as most rotas are being cut the bone to keep our overheads down as a means of survival. Unfortunately this doesn’t help our staff who, like anyone else who works, want the hours and the money, especially at this time of the year.”

Karen Dee

Airport Operators Association chief executive, Karen Dee, was also underwhelmed, saying: “Aviation ranks with hospitality and tourism as one of the worst hit sectors in the UK economy. Airports have lost billions in revenue already in this pandemic and, with Omicron hitting aviation before any other sector, airports continue to accrue losses at an alarming rate following the most recent government-imposed travel restrictions.

“Yet, despite the critical role airports and aviation connectivity play in the economy, the Chancellor time and again overlooks our sector when he announces sector-specific support measures. Meanwhile, our airport competitors in the US, Germany and Italy have received generous grants so they can maintain their critical operations and be ready for the recovery.

“The lack of significant government support means that the UK’s aviation connectivity recovery will be longer and harder than the recoveries of our competitors. This will hurt UK jobs, damage our economy and undermine the UK Government’s global Britain ambitions.”