Necessary support for British hospitality sector

Hospitality and food industries are extremely significant for the British economy, but also most affected by the coronavirus pandemic. The hospitality sector provides workplace for more than 3.2m people, which represents 11% of total employment in the United Kingdom. It is the third largest sector in the country, generating revenues of GBP130bn and representing 5% of GDP. Last year, the value of food and drinks exports exceeded GBP23bn (of which almost GBP5bn represented the exports of Scotch whisky).

It should be one of the priorities for the authorities to support these sectors in a possible prompt return to normal state. No wonder, the government is taking a number of actions to mitigate the adverse effects of lockdown resulting from COVID-19 pandemic and to facilitate a quick return to normal functioning for companies from these particular sectors. British hospitality and trade organizations and associations get actively involved in these actions.  

British government’s support

In March, the British government passed extraordinary regulations which are intended to prevent landlords from letting commercial properties to other tenants if the existing tenant is not able to pay the rent during the COVID-19 pandemic. This solution is meant as protection for bars and restaurants. In addition, Chancellor of the Exchequer, Rishi Sunak, guaranteed British companies with a package of loans and subsidies totalling GBP330bn. Sunak also announced financial subsidies up to GBP25k each to support hotel, recreational and retail companies, but only for those in most dramatic situations whose value does not exceed GBP51k.  

An All-party Parliamentary Group for Hospitality and Tourism has recently started developing a plan of support to British companies in quick and smooth return to normal functioning once the lockdown is over. This group plans to present far reaching assumptions which will help the government to support this sector, including an appropriate date of the sector reopening, means necessary to provide security to companies, business support, reinstatement of the chain of supplies, and guidelines for companies. The first effects of the group’s work should be expected in mid-May.  

Smooth food and beverages flow

Food and Drink Federation, an organization representing British food and beverages producers, has issued an appeal letter signed by more than 30 directors of capital groups, including Karen Betts, director of Scotch Whisky Association. In this letter, published on FDF website, Ian Wright appeals on behalf of the industry to maintain food and beverages imports and exports at this critical moment for the economy. He highlights the key significance of this sector to the economy and brings to attention the effort of more than 4 million employees to ensure continued supply of food. According to FDF, now more than ever, it is extremely important to maintain the global flow of food and beverages. The continuation of trade through open markets will also be absolutely necessary in order to support economic recovery worlwide and protect the economies of exporters, including the United Kingdom. British food industry cannot act in isolation – famers rely on imported animal feed and need access to other markets to sell their products. Producers rely on exports to develop their activities, as well as imports which supplements the use of their domestic ingredients and raw materials. Restaurants and retail traders need all year access to full product range in order to counteract seasonality and meet consumer demand. In consequence, the British food and beverages sector has called on all governments to ensure smooth flow of trade without limitations.

#NationalTimeOut

Member associations of food and catering companies also have their own ideas how to support the sector which could ensure security. Jonathan Downey, founder of Hospitality Union, issued a letter to the British Chancellor of Exchequer, Rishi Sunak, proposing a nine-month suspension in rent payment which could save more than 2 million work places. This Hospitality Union proposal called #NationalTimeOut has been supported by other directors and representatives of the British hotel sector.

The idea is to move the payment dates of nine months’ rent, so that restaurants and hotels do not have to pay anything until January 2021. It could make survival and profitability possible for more than half of hotel companies which otherwise will not be able to maintain their activity. Downey’s proposal also includes solutions beneficial to venue owners – each rent agreement could be extended by nine months, and the payments should not be lost but rather moved towards the end of the agreements. The organization also proposes solutions for the bank sector making it possible to postpone loan instalments for properties included into the program.

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