Budget 2021: Restaurant and hospitality bosses react to Rishi Sunak’s announcement of furlough extension and loans

Rishi Sunak’s budget has been met with a cautious welcome by London’s top chefs and restaurateurs.

In the Chancellor’s address to the Commons this afternoon, in his second full budget, Mr Sunak acknowledged that the pandemic had “fundamentally changed” day-to-day life, speaking repeatedly how different life has become, and describing the financial fallout as “acute”, citing a 10 per cent shrinkage in the economy and hundreds of thousands of jobs lost across the country.

However, Mr Sunak struck an optimistic – albeit self-congratulatory – tone, saying: “I said I would do whatever it takes, I have done, and I will do.” He added later: “We will recover” and vowed to protect livelihoods across the country.

For hospitality businesses, the most pressing points in Mr Sunak’s Budget are as follows:

  • The furlough scheme will be extended until September. Nothing will change for employees, who will continue to receive 80 per cent of their wage, but in July businesses will be required to contribute 10 per cent of their employees salary, rising to 20 per cent in August and September.
  • Hospitality and leisure businesses, including gyms, will receive grants of up to £18,000.
  • The introduction of a Recovery Loan Scheme, whereby businesses of any size can apply for loans from £25,000 up to £10 million through to the end of this year. The Government will guarantee these up to 80 per cent.
  • The 5 per cent VAT rate will be extended for six months until the end of September. It will then rise to a temporary rate of 12.5 per cent, until April.
  • The business rates holiday will continue until the end of June, and then will be reduced by two thirds for closed businesses, up to the value of £2m. There will be a lower cap for those who have been able to stay open.
  • The planned rise alcohol duty will be frozen for another year.

Broadly, this addresses many of the concerns of businesses across London, who were pushing for a VAT extension and the continuation of furlough, as a well as continuation of the business rates holiday.

“The furlough scheme and the cuts to VAT have offered some much needed support over the last twelve months,” Hicce co-founder Gordy Mcintyre told the Standard, “Without these I am not sure we, as a relatively small, independent business, would still be in existence.

“However, after three months, we are still awaiting a decision on our business grant application, which we were informed we would receive after 20 days. This is hugely disappointing and with no process in place to check the status of our application, we are left in no man’s land. When introducing any additional grants, the Government must take into consideration the capacity of local authorities to implement such schemes.”

David Moore, owner of Pied à Terre, added another note of gladness. “All in all, it feels like a good budget! The reduction in business rates is great, though ultimately i’d be happier if he had said he was willing to look at the system and fix it, but for now we’ll take it.

“The furlough extension and employer contributions of 20 per cent will support those who need it most, as the industry comes back to life. The grants feel a little on the low side, though I’m very grateful for them, and the VAT reduction looks like it’s on the money, with an extension and then a tapered return. Overall I got what I asked for, so now it’s time to focus on regrowth.”

His sentiments were shared by Rik Campbell, the co-owner of Kricket, who told the Standard: “I’m feeling inspired, it’s an innovative plan and it feels like the government are doing what needs to be done – supporting the right businesses and asking for contributions from those that can afford it.”

That said, not everyone was quite so sanguine. Various Eateries boss Yishay Malkov said he hoped that communication between the hospitality industry and Government would improved over the coming months. “The extension of furlough is to be welcomed but in many cases is ‘too little, too late’ as furlough supports the employee, not the business and still costs them to maintain. Many will have to lay off their teams as they simply have no cash left to sustain this scheme.

“We would like the hospitality industry’s relationship with the government to be a true partnership moving forward, based on mutual respect, trust and evidence based decisions. Only this will ensure the future success of the industry.”

Jeremy Simmonds, the co-founder Competitive Socialising, which looks after mini-golf bars Swingers, likewise warned that job losses were not being avoided but merely delayed.

“The budget was largely as predicted. The big news is the extension of the furlough scheme, which is welcomed by many,” said Simmonds, “However, I can’t help but feel that the scheme has masked the deep pain and unfair treatment suffered by the UK hospitality industry during the pandemic. Our business has traded for about two months out of the last year and the government support has been wholly inadequate.

“The reality is that the vast sums invested in the furlough scheme will, due to the lack of comprehensive business support, only have served to delay job losses. To protect jobs the government needs to protect the underlying businesses that provide the jobs.”

Writing on Twitter, UK Hospitality chief executive Kate Nicholls urged Mr Sunak to support restaurants and bars in order to make good on his promises of invigorating job growth across the country. “If govt wants to deliver jobs, growth and investment at pace across UK then it needs a robust and resilient hospitality sector [sic]” said Nicholls.

Bocca di Lupo’s Jacob Kenedy was more scathing: “The last time the Government tried to compromise and protect both the NHS and the economy it failed miserably, and lives were lost. Today Rishi compromises to try to protect both the government finances, and the businesses and people who make the economy. Let us pray this compromise does not fail so miserably as the last.”

Chris Galvin, who co-owns the Galvin Brothers restaurant group, warned that while the Budget offered some good news, the fallout of Brexit means staffing will continue to be an issue. “We are pleased that the furlough will be extended to help protect jobs through until September, this flexibility will hopefully prevent more loss of jobs, and the VAT and rate extension was a must to give us any chance of recovery,” Galvin said.

“But many people forget two important things. The first is that through no fault of ours, we have been prevented from working and earning a living and for the best part of seven months we have lost trade. The second is how Brexit has slipped of the front page unnoticed and besides the issues of supply which will start in April, from June 30 it will be almost impossible to recruit from outside the UK,  because the government considers hospitality unskilled.

“In London, most of the hospitality industry employs over 80 per cent of their staff from Europe, so now, from June, if we want to employ from outside our borders we must become sponsors at great cost, and then only employ those with a degree or similar earning a minimum of £25,600. This applies not only to us in hospitality but to nursing, cleaners, builders and the whole underbelly of London that’s keeps it running."

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