When Britain went into its first lockdown in March, pubs were forced to tip away an estimated 70m pints of beer before they could eventually reopen in July. This was just one of many costs forced on to the UK’s businesses by the sudden measures to halt the spread of coronavirus. It is probably inevitable that as a place where people mingle indoors, the hospitality industry is a key target of England’s new national lockdown. Unlike in spring, however, the suddenness of the change — and with it many of the same costs — could have been avoided.
Having encouraged workers to go back to work in September before reversing course in October, Prime Minister Boris Johnson’s government launched the new lockdown after he ruled out the option just days before. While a need to change course as the facts change is understandable, the government’s repeated U-turns create serious economic as well as political costs. Companies need to plan for the future. The priority now must be to set out a sustainable long-term strategy for coping with the virus.
Businesses warned on Monday that they stand to lose millions of pounds in revenue thanks to the shutdown of hospitality and non-essential shops during the key Christmas period, when many reach break-even for the year. While the government says England’s lockdown will end on December 2, few companies now trust the ever-changing messaging. Many ask why they invested so much in making their businesses safer only to be closed again. In the circumstances, Mr Johnson’s decision to pull out of an appearance at Monday’s annual conference of the CBI business group was regrettable.
A package of measures to provide additional support for companies through the next month is now essential. While some retailers have invested in online shopping and pubs and restaurants in takeaways many businesses are even less able to survive a lockdown than they were in March. Credit facilities have been drawn down, and cash reserves used up. The decision to extend the furlough scheme by a month is welcome, as is greater support for the self-employed. But rent and other costs will still need to be paid — Revo, the retail property organisation, warned on Monday that property owners have already sustained £4.5bn in lost rent.
With restrictions set to continue regionally even after the nationwide lockdown is eased, it is now clear economic support will be needed in some form throughout the winter. That means clear criteria on when the schemes are available; the Scottish and Welsh governments and local leaders in northern England can rightly point out that the furlough scheme was only extended once southern England was faced with lockdown.
A new mix of policies will be needed, too, to provide more support for individuals who are laid off rather than sustaining what may prove to be unviable “zombie” companies or jobs. Gaps in the furlough scheme, created at short notice in March, mean many workers and businesses have been treated very differently despite starting in the same place. Future schemes need to be more carefully targeted to sectors that are worst affected or forced by government orders to close.
The best help the government can provide is to set out a realistic framework for keeping the virus under control once the latest lockdown comes to an end. That means preparing for different scenarios, with targeted support packages for each. Businesses need clarity above all, and a basis on which they can take decisions, if they are to survive a brutal pandemic winter.