Bars, pubs and retailers are calling for a fresh package of government financial support to prevent more redundancies and business failures as the new lockdown in England hits the crucial run-up to the festive period.
Companies have welcomed the extension to the furlough scheme which was announced alongside the new lockdown on Saturday, but said that more help was needed to save thousands of businesses already on the brink of collapse.
The run-up to Christmas is critical for both industries. Last year, for example, non-food retailers generated over a fifth of their annual turnover in November and December according to the Office for National Statistics.
Michael Kill, chief executive of the Night Time Industries Association, which represents bars, nightclubs, restaurants and music venues, called for “immediate and significant financial support” including a grant scheme to cover operating costs.
About half of the 1,446 nightclubs that were operating in the UK pre-coronavirus are now “in quite considerable trouble”, Mr Kill said.
Simon Emeny, chief executive of Fuller’s, which runs 390 pubs, said: “What [the furlough scheme] doesn’t really do is help businesses. These measures do nothing to help the enormous build-up in backdated rent. Every business is now operating on negative cash flow and now we face another mandated closure period.
“We will need to find a solution to the enormous build-up of rents . . . that will need to involve a government contribution. Let’s face the reality — there are day-by-day announcements of business failures in this sector.”
The government last month extended until the end of 2020 a moratorium on landlords taking back commercial premises on which rent has not been paid. This has enabled retailers and hospitality businesses to pay only a fraction of their normal rents on time, but the entire sums remain due, apart from where landlords have already agreed to reductions.
Mr Kill said his organisation had proposed that the government pay one-third of rent due, with landlords bearing the loss of another third and tenants paying the rest, to prevent businesses’ rent arrears becoming overwhelming.
He added that an existing grant scheme offering up to £3,000 a month to businesses forced to close “will not touch the sides” of many companies’ needs and does not cover nightclubs, which have been shut since March.
His view was echoed by James Daunt, chief executive of bookstore chain Waterstones, who said that retailers “needed a good Christmas to deal with those arrears — now they are not going to get one”.
He said retailers in other European countries had more certainty over how rent arrears would be handled. “We could well end up with an insurmountable problem,” Mr Daunt said.
The British Retail Consortium called for “support to businesses that will be forced to close”. All “non-essential” stores, as well as pubs and restaurants, must shut from Thursday until at least December 2.
“The announced closure will have a significant economic impact on the viability of thousands of shops and hundreds of thousands of jobs across the country,” the group said. The BRC had already called for a 50 per cent cut to business rates once the current rates holiday ends in April.
Ministers have rolled out a series of schemes to support businesses hit by lockdowns and other restrictions, including furlough pay, loans and grants.
But these have not prevented a wave of business collapses and redundancies in leisure and retail, even before the fresh lockdown.
Pub groups including Marston’s and Greene King have announced thousands of job losses, while the UK’s largest nightclub operator, Deltic, last week put itself up for sale, saying it would run out of cash by the end of the year.
Retailers including Monsoon Accessorize, New Look and TM Lewin have been through insolvency processes. Retail failures so far this year have affected 82,880 employees, almost double those hit in all of 2019, according to the Centre for Retail Research. Estimates ahead of the new lockdown suggested more than one in four of the UK’s 39,700 pubs would go out of business in the pandemic.
Government relations with hospitality businesses have frayed in recent weeks because of the imposition of a 10pm curfew that scientific advisers to the government said would have little effect.
Footfall in the important six weeks leading up to Christmas is now set to be down 62 per cent from last year, according to retail intelligence experts Springboard.
“If we are properly open again by December 2 then that is fine, given that book sales tend to come hard and late,” said Mr Daunt.
“But if it is extended we will be in the position of having to do damaging things — basically cutting stores and jobs.”