[Relevant Documents: First Report of the Environment, Food and Rural Affairs Committee, Covid-19 and food supply, HC 263, and the Government Response, HC 841, and oral evidence taken before the Environment, Food and Rural Affairs Committee on 9 and 23 February 2021, on Covid-19 and food supply: follow up, HC 1156 e-petition 552201, Create a Minister for Hospitality in the UK Government, e-petition 329985, Give further financial support to the Events and Hospitality industry, and e-petition 572283, Extend the VAT at 5% for hospitality until at least March 2022.]
That this House has considered support for the hospitality industry throughout the covid-19 pandemic.
I thank the Backbench Business Committee for granting the debate, and the hon. Member for Brentford and Isleworth (Ruth Cadbury) for co-sponsoring it. Without a doubt, the hospitality sector has been one of the hardest hit throughout the ongoing covid-19 pandemic. It will have been shut for 10 out of 14 months when it eventually reopens. I do not believe that many of us foresaw that a year ago when we entered the first lockdown.
Support for the sector is extensive across the House, as shown by the number of contributors today. This debate is almost as booked up as I understand much of the hospitality sector itself is, when allowed to reopen. With that in mind, I will keep my remarks brief and will not take interventions, to enable as many colleagues as possible to speak.
In 2019, the hospitality sector contributed £59.3 billion in gross value added to the UK economy—around 3% of total UK economic output. At the start of last year, there were almost a quarter of a million hospitality businesses in the UK. The sector is vital to my North Devon constituency, which is proud to boast 105 pubs, with almost 10% of all businesses being in the hospitality sector.
The latest research by UKHospitality shows that the sector will have lost £86 billion in revenue by the end of March 2021, down 68% on pre-pandemic figures. It would have been more were it not for the unprecedented support packages given by the Chancellor, combined with the innovation shown by the sector in adapting their businesses to become covid compliant, increase outdoor capacity, and become take-outs. Our North Devon “Take Out to Help Out” competition saw thousands of residents vote to support their favourite take-out that has helped them through lockdown, and many congratulations to the winner, Nartnapa Thai Kitchen in Lynton.
The sector is also racked with coronavirus-related debt—an estimated £2 billion in rent debt and £6 billion in loans and other finance—which makes the recovery that bit more challenging. As someone who ran a debt-financed small business for 15 years, I know the toll that that type of balance sheet can take on small and medium-sized businesses, of which the sector has so many, and the extra pressure that it puts on achieving profitability, particularly for seasonal businesses that are so dependent on their summers to see them through the lean winter months.
Even assuming that the road map stays on track, the sector cannot fully reopen until 21 June. Some 60% of pubs may not reopen on 12 April, despite the Government’s relaxing regulations to enable them to trade outdoors more easily. That will mean that the support will taper off before there is a full return to profitability, which is forecast to take at least six months after the restrictions are fully removed. In short, the Government support may be ending too early relative to their lockdown-lifting road map.
For my three minutes, as the chair of the all-party parliamentary group for the night-time economy, I want to focus on the night-time hospitality sector, which has been pretty much completely closed for over a year, but which makes a massive contribution to our economy and our tourism sector. Our recent APPG inquiry looked at the effect of the pandemic on the night-time economy and we found that without urgent support, many nightlife businesses could be lost. We are at the critical point. Lots of venues have just about survived until now but they are racking up debts and they need help, so I want to raise five issues briefly.
First, on debt, many businesses will be in arrears for rent, utility and other costs by the time they can reopen and, when they reopen, creditors will expect to be paid. We need a solution for that amassed commercial debt, whether that is a shared burden approach to debt, as we have seen elsewhere, or support for long-term restructuring so that debt does not need to be paid off until businesses are able to do so over the long term.
We need specific sector support for businesses that have been hit harder than almost any other sector and will not be able to fully reopen straight away, and for individuals. Disproportionate numbers in the hospitality and events sectors are self-employed. Many still fall into the gaps in support and there is a strong case for extending the job retention scheme for the hospitality industry until summer 2021.
We need support from the culture recovery fund. It is a great idea, but the fund has had a limited impact on night-time venues. Of £1.57 billion, funds have been received by only 12 nightclub-type venues. These are cultural hubs at the heart of our city and town centres and we need to look at the criteria for future support.
On the reopening plan, the Government set out a road map to reopening, which is welcome, but venues need to be able to open at the capacity that makes them viable, so it is important that the Government work quickly with the sector on testing or other mitigations that can allow venues to open. I am worried that the test events that are part of the events research programme are not fully worked up yet. To make that happen, there has to be close partnership with the industry as soon as possible.
4:59 pm
Kate Griffiths (Burton) (Con) [V]
I thank my hon. Friend the Member for North Devon (Selaine Saxby) for securing this important debate, and I agree with the many important points that she made. The unprecedented support that this Government have provided to hospitality businesses over the past year has undoubtedly saved many jobs and livelihoods across my constituency of Burton and Uttoxeter. However, there is still much more that can be done to help this industry recover from the biggest crisis that it has ever suffered.
Over the past few years, we have seen the slow decline of our high streets, as habits have changed and online shopping has taken over. We must not allow the same thing to happen to our community pubs and the breweries that support them. Supermarkets have stayed open and continued to meet the needs of shoppers during this period of lockdown, but as we follow the road map and restrictions ease, we must ensure that our local pubs are able and willing to welcome us back.
My hon. Friend the Minister will be aware of the high street’s “Shop Local” campaign, but will he support Carling’s campaign to “Support Your Local”? As colleagues will know, I am proud to represent the historic brewing town of Burton-on-Trent, where Carling is brewed by local people. The campaign highlights the role of the local pub—a place where old stories are remembered and new ones are made, and the best place for a nice cold pint, but much more than that, a place that is at the heart of our communities.
Pubs play a huge role in all our constituencies. They provide significant employment opportunities for young adults and are at the centre of our towns and villages. In Burton, pubs and breweries take centre stage in our town’s heritage. Over the past year, they have been working tirelessly to ensure that they keep customers safe, and so many have gone beyond their usual remit to support their communities throughout the pandemic.
The £352 billion package of support provided by the Government, including for the hospitality industry, has ensured that the sector has survived the difficulties of the past year, but we must recognise the wider role that the British pub plays in our communities and ensure that pubs not only survive but thrive in our neighbourhoods, supporting jobs and growth in local areas.
The Chancellor announced that beer duty would be frozen this year, but I urge the Minister to look at the benefits of a new draught-beer duty rate specifically targeting wet-led community pubs and breweries, which have not been recipients under other policies. Many pubs and bars are in a perilous financial position, and many will not survive without help. I hope that, during the forthcoming review of alcohol duty, the Minister will reflect on these arguments and help to level the playing field between the price of beer sold in social community settings and cheap supermarket alcohol consumed at home.
5:02 pm
Adam Holloway (Gravesham) (Con)
I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on securing this important debate. I will make just a couple of points, on dates and on data.
Earlier this afternoon, I rang a friend who runs the Griffin Inn in Sussex to ask about this, and he said that dates are vital. We must stick to any dates that we have. Over Christmas, of course, many establishments lost enormous amounts of money buying in stock that they then could not use. In his case, I think it was £25,000-worth of stuff.
On data, some people are having a very good time of it. Supermarkets are making a fortune. Pubs and hospitality have been amazingly supported by the Government, but we must not forget the point made by Ian Eldridge, who runs a restaurant in my constituency called Bartellas, that they still have enormous costs. They have employer contributions, lease purchase deals and lots of monthly contracts, and of course they also have maintenance.
My second point on data is a plea to the Minister and, indeed, the Prime Minister: things do seem to be going, thank God, in a very good direction in terms of hospitalisation and deaths, and if we can unlock hospitality earlier, let us not be dogmatic about it—let us do it. Let us reopen well-run hospitality, because I would much prefer my constituents to be drinking there than cramped in their front rooms.
Like others, I congratulate the hon. Member for North Devon (Selaine Saxby) on securing this very important debate.
I agree with a lot of the points that have been made by hon. Members who have spoken, but would like to add a few more. Despite the unprecedented support from every level of government, including the Welsh Government and local authorities, yesterday’s Office for National Statistics data offered quite a sobering reminder of the devastating impact that the pandemic continues to have on businesses and employment in Wales. A year into lockdown, the Welsh unemployment rate has risen by 1.1%, while Wales’s perennially high economic inactivity rate has reached 24.4%, meaning that a quarter of the Welsh workforce is either not in employment or not seeking employment. I hope this debate will be a helpful reminder to Government of the importance of the hospitality sector both as an opportunity for jobs and for the way in which it helps particular regions, particularly coastal and rural areas, where other opportunities are sadly fewer and farther between.
Before the pandemic, the hospitality sector contributed £59.3 billion to the UK economy and employed over 2.3 million workers across the UK. That in itself speaks for the significant contribution that the sector makes, but it was also an important gateway into the labour market for younger workers, with approximately one in 14 young adults employed in the pub and brewing sector alone. This sector is particularly important in rural areas such as my constituency of Ceredigion, where approximately 4,500 people, or 17% of the local workforce, are employed directly by the hospitality sector. It is worth noting that the sector, through local procurement and purchases from wholesalers such as Harlech Foodservice and Castell Howell, plays an important role in supporting the wider economy and rural incomes. Businesses in the hospitality supply chain, from food wholesalers and breweries to culinary suppliers and contract caterers, have not received as much attention, but they are essential for the success of the sector and should be supported by the Government.
5:07 pm
Holly Mumby-Croft (Scunthorpe) (Con) [V]
I thank my hon. Friend the Member for North Devon (Selaine Saxby) for securing this debate.
There is no doubt that it is thanks to the Government’s support schemes that we have been able to prevent many local hospitality businesses from being lost. Having worked with hundreds of them, I know that local businesses always have their employees and our community at heart. In turn, we in North Lincs value them and their ties with the community, with places like Mulligans Sports Bar sponsoring local darts, snooker and pool teams. Many of my local hospitality businesses did not let a pandemic stand in the way of their helping people. I could list many examples our area can be proud of. For example, the hospital’s sports and social club opened up space for NHS staff to use for meetings. The Shires and many, many other pubs have provided hot food options for those at home. Pubs such as the Queen’s Head in Kirton have provided lunch for volunteers and health workers in our vaccination centre.
Many local hotels provided accommodation to NHS workers and worked with North Lincolnshire Council to provide a place to stay for those who faced homelessness. Many businesses were able to innovate. The Black Door in Scunthorpe, for example, has worked to share its door-to-door cocktails idea with businesses across the country. Many venues started offering takeaway and delivery options. Some even generously offered their space for vaccinations to take place. Venues such as the Old School in Messingham kept us really entertained with their uplifting social media posts. After a long, imposed state of slumber, hospitality businesses in Scunthorpe are raring to open. From Hibaldstow to Ashby, from Bottesford to Howsham, local business owners are preparing their teams and their premises to go back to work—but they still need help.
Moving forward, I urge the Government to continue to carefully review existing restrictions, ending them as soon as we can. I once again urge Ministers to provide further guidelines for the weddings industry, to allow socially distanced on-site look-arounds at places such as beautiful Cleatham Hall in my constituency, where there is space to operate safely. I ask Ministers to review support for kennels and catteries; to open up the kickstart scheme for long-standing clubs; and to consider suggestions for draught-beer duty relief. I welcome the expansion of the self-employment income support scheme eligibility criteria, but I hope that Ministers can work with colleagues in the Treasury to bring forward the date on which the fourth grants can be awarded, as many self-employed in my area need this support now.
Hospitality businesses in my constituency have had an enormously difficult year: not only have they been closed for many months, but when they have been allowed to open, they have faced a constantly changing set of rules and regulations. Many have not received the financial support they needed from the Government, and many are fearful for their future. I only have time to mention a couple of them, but their struggles are shared by countless other businesses across my constituency.
In December of last year, I visited the Abbey Arms in Abbey Wood as part of small business Saturday. Staff there told me about the challenges they faced and their uncertainty about the future. Of course, not long after that, all pubs were once again required to close. Other pub owners in my constituency have contacted me, including the owners of The Duchess of Kent in Erith and The Victoria in Belvedere. They need assurances from the Government that they will be treated fairly in the future and provided with support to reopen. The coming months will be particularly difficult for pubs and other venues with no outdoor space. Can the Minister set out what he will do to help these businesses? A great number of my constituents are rightly concerned about the future of their local pubs. Pubs are centres of our communities, and the Government urgently need to set out how they will help pubs not just to reopen, but to thrive, in the coming months and years.
The wedding and events sector has been extremely hard hit. Local family businesses have had to fight to survive over the past year, as nearly all their usual business has disappeared. Many businesses in the events sector have been repeatedly refused grant funding by Bexley council, which cites the Government’s tight criteria. These are businesses that have been allowed to fall through the cracks. The Government must look again at what more funding can be provided to help these businesses restart as restrictions allow. Of course, behind each of these businesses are people who have taken risks to start small businesses and contribute to our economy, our community, the people they employ and the supply chain of which they are part.
I draw the attention of the House to my entry in the Register of Members’ Financial Interests.
At long last, we find ourselves in the final stretch of the long war with covid-19. Thanks to the tireless efforts of NHS staff and volunteers, vaccination rates are soaring, and many of us are now eagerly looking forward to the gradual relaxation of lockdown measures and the reopening of shops, cafés, restaurants and pubs. However, for much of the hospitality industry, the next few months will be fraught with uncertainty and worry. Independent businesses up and down our high streets are in the midst of an intense cash crisis. Grants and loans have been exhausted; proprietors are being forced to defer bills and mortgage payments; over half of businesses in the accommodation and food services industry have just three months’ cash reserves; and many small businesses find themselves burdened with unmanageable levels of debt that could well sink our economic recovery. Once again, this Government are failing to do what is needed to protect the hospitality industry.
Time and again I have called in the House for a comprehensive package of support that gives owners and workers much-needed security and peace of mind in the challenging months ahead. Instead, all this Government have delivered are piecemeal measures that have left much of the hospitality industry barely able to keep its head above water. Businesses today have access to lower levels of financial support than they did at the start of the pandemic, despite finding themselves in far more severe financial trouble. The Government were far too late in extending the furlough scheme and business rate relief—a delay that needlessly cost jobs. The March Budget contained no measures whatsoever to assist small businesses with much-needed debt restructuring.
The impact on workers has been devastating. Prior to the pandemic, more than 3 million people—8% of the entire UK workforce—worked in hospitality. Over the last year, a wave of redundancies has swept the sector, with the youngest and lowest-paid workers bearing the brunt. Our economic recovery will be built on the backs of small businesses and our local high streets. We now need decisive action that gives independent businesses confidence in the future, and safeguards people’s livelihoods.
5:17 pm
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This summer will no doubt be busy for UK hospitality. We know that pubs are one of the top three reasons tourists visit the UK, so their survival is linked to our inbound tourism and its associated economic benefits. As we move into winter, wet-led pubs in particular are very dependent on their locals returning to the bar, which we know did not happen to historical levels last winter. Going back to the pub is a much easier ask than so many of the others that we have endured over the last year, but have our behaviours fundamentally changed during the pandemic? I hope not, as in many rural villages in constituencies such as mine the pub is the heart and soul of the village. We need to ensure that they can return to their former vibrancy at last orders.
Calls are increasing for a review of beer duty to target support into our pubs, bars, and clubs, which could be balanced with duty rises in the off-trade, given the ever growing debt that the country is in. The Chancellor has shown throughout this pandemic how quickly he and his colleagues in the Treasury can pivot and adapt to create new lifelines for businesses. While I pay tribute to his excellent work, perhaps the job is not yet done for hospitality.
I believe that a draught beer duty would be targeted, quickly actioned support and could play a crucial role in stopping so many of our vibrant pubs and other hospitality businesses from going under later in the year. Our pubs provide a safer environment for alcohol consumption than elsewhere, and we should do all we can to encourage people to return safely as soon as possible.
There are now 600,000 fewer jobs in the sector than there were before covid hit our shores, despite the unprecedented support of furlough. As hospitality businesses look to reopen, I hope that they will engage with the new Government packages to get people back into work, such as the kickstart scheme, and reach out to their local Jobcentre Plus. I know that in rural North Devon, hospitality businesses have not always engaged with their local jobcentre, with local ads or posters in the window historically sufficing, but a wide range of highly qualified people are now unfortunately looking for work and vacancies may well be filled more rapidly through this route than those pre-pandemic.
There are other areas in the broader hospitality sector whose pandemic has also been problematic, such as our contract caterers and wholesalers. These businesses were not required to close, but their trade has been limited mostly to the public sector, and they have unfortunately missed out on many grant payments. Breweries, especially local microbreweries such as GT Ales in Wrafton, despite reinventing themselves for home delivery, have had a challenging time.
The wedding industry and its supply chain, quite rightly, have been repeatedly highlighted as a sector in need, the important big day being intricately linked with hospitality. It is estimated that more than 200,000 weddings have been either cancelled or postponed since the first lockdown and that the sector to date has lost at least £6.4 billion, a figure that continues to rise. It is fair to say that the hospitality sector has received an unprecedented level of support across VAT reductions, business rate holidays, grants, loans, the job retention scheme, the freezing of alcohol rates and a wealth of other measures.
I have been in contact with my local hospitality sector and the national hospitality sector throughout this pandemic, and I very much hope that dialogue will continue as we emerge and build back better. The Chancellor said that he would do “whatever it takes” and indeed he has, but to prevent our vital and much loved hospitality sector from suffering from long covid, they may just need a little more creative support in the coming months.
Finally, security is a key challenge for the sector, and I do not think that has yet been fully recognised. Because of covid, lots of security professionals have had to look for alternative jobs and many do not want to risk coming back to an uncertain future. Six in 10 late-night door supervisor positions are at risk of not being filled. That is important because venues rely on them to fulfil their licence requirements and cannot open without them. There will be high demand for the small numbers of door staff and we need to look at support and a solution.
I just have time to mention event cancellation insurance. Without a Government-backed insurance scheme, many festivals and big events will cancel this summer. France, Holland, Austria, Switzerland and Germany have all introduced some sort of Government-backed scheme. We need one to protect our world-leading events.
Nightclubs and music venues bring joy and a sense of community to our cities and towns. We cannot let these vital businesses fold. It jeopardises our wider economic recovery and leads to a massive cultural as well as economic loss to our country.
While this month’s Budget contained several welcome measures for hospitality, I again urge the Chancellor to extend the 5% rate of VAT to the full financial year rather than six months and to consider proposals for a specific draught-beer duty to encourage on-premises consumption—a point that has been made very effectively by other hon. Members. Such measures would help to ensure that hospitality businesses can make the most of the upcoming summer season. Hopefully we can all look forward to a summer of unlocking. With potentially several months of restrictions, in various forms, to come, I urge the Government to be attentive to the needs of hospitality as a pivotal employer and significant economic multiplier. Particularly for those people in areas hardest hit by the pandemic, its survival is essential for post-pandemic recovery.
Thanks to the incredible support package and some real northern grit, many hospitality businesses in my area are still with us. They are now pumping up the tyres at the speedway, stocking up the fridges in our restaurants, and polishing their pint glasses in our pubs. We must continue to support them so that on this beautiful spring day, we really can look forward to brighter months ahead, and a chance to build back these valued businesses in Scunthorpe.
Hospitality workers are disproportionately likely to be women or from an ethnic minority background, and just this week, the Office for National Statistics published statistics showing that people under 25 account for 60% of the jobs lost since February 2020. The human toll of the pandemic has taken many forms, but we must not forget those who have lost their jobs or their businesses. We need action from the Government right now to ensure the hospitality industry is properly supported.
That is why Labour is calling for an ambitious high streets fightback fund that will give much-needed assistance to those businesses that have been most devastated by the pandemic. Labour’s plans will stop small to medium-sized enterprises being swallowed by a black hole of debt, by allowing businesses to start repaying Government loans only when they begin to grow again. Businesses must also be allowed to convert debts into employee ownership trusts, giving workers a real stake in the future of their workplaces. We must also create the conditions that allow local shops to compete with online retailers on a more equal footing, and give local authorities the powers they need to fill empty units as a means of revitalising our neglected high streets. Finally, we need action to tackle the scourge of low pay and insecure work that has plagued the hospitality industry for far too long. That means ensuring that every employee is paid at least the minimum wage and has a guaranteed number of hours each week.