Delay in dropping all restrictions is a major blow, as one in 10 pubs could close
As it became clear that the June 21 date for scrapping remaining coronavirus restrictions was going to slip, the pleas from the pub industry grew ever more desperate. It has been warning since the pandemic started that many pubs were in danger of closing permanently, after a period when the closure rate had slowed down but not stopped completely.
It’s understandable that the organisations supporting pubs should paint a worst case scenario as they bid to get the attention of people in power, but the worst has not come to pass at least in this area. Very few pubs in and around Oxford have not re-opened since the pandemic hit 15 months ago, but that doesn’t mean they are doing well. Behind the cheery smiles of landlords and their staff there is very often real suffering, a mental health crisis and a mountain of debt despite the financial help they have received throughout the pandemic.
With the ending of coronavirus restrictions put back until – we hope! – July 19, the big issue now is whether the Government will put in some tailored support for pubs, as for other hard-hit sectors such as nightclubs and the travel industry. Like all affected businesses, pubs have benefited from 100% business rates relief, due to be reduced to 66% (meaning they must pay one-third) from July 1. Likewise, they have benefited from furlough – but that is being phased out, with businesses now having to pay 20% of laid-off people’s wages, rising to 40% by the time the Coronavirus Job Retention Scheme is due to end on September 30. The temporary cut in VAT from 20% to 5% has helped food-led pubs, but doesn’t apply to alcohol.
Another problem is that Bounce Back and Coronavirus Business Interruption Loan Scheme grants are starting to fall due for repayment. While pubs have had one-off Restart Grants (up to £18,000 but usually much less), ongoing restrictions that have reduced capacity mean that most pubs have been losing money ever since re-opening outdoors on April 12.
Despite all this, the Government seems set against further financial help for the worst affected sectors, including pubs. Will it really let thousands of pub businesses go to the wall?
It is small businesses that are most at risk, whether free houses or the tenants or lease holders of large breweries or pubcos, although they have mainly waived or substantially reduced rent during periods of closure. Their plight was revealed in a survey this month by the British Institute of Innkeeping (BII) which found that 11% of pubs would collapse if restrictions were not lifted on June 21, while 43% would make a loss and 34% would only break even. Among respondents to the survey, 35% are tenants, 29% free houses and 25% lease holders – and 85% run only one pub. Average debts due to the pandemic are between £40,000 and £80,000. The BII is calling for pubs to get an extension of business rates relief until April 2022, further extension of the VAT cut until next year, a cut in beer duty for pubs, and a postponement of repayments of loan schemes.
BII CEO, Steve Alton, said: “Pubs at the heart of their communities are built on the resilience provided by the summer months, boosted by sporting events, large scale family celebrations and being an essential part of the UK tourism offer. Put simply, every day of critical summer trading lost, is a step closer to business failure. Whilst many outside of the hospitality sector may perceive this delay as being a small price to pay, for pubs, with 16 months of severe disruption and closure behind them, any further delay requires further and immediate support.
“The pressure of debts that have mounted over the course of the pandemic is now meeting significant costs coming back on line for businesses head-on, creating a perfect storm. Even without the delay, we know that the recovery for our sector will be prolonged over many years. This delay and ongoing uncertainty will have far-reaching consequences, affecting the confidence of consumers, potential employees uncertain on the stability of jobs, and essential investment in our viable businesses.
“Government must now break this perpetual cycle of uncertainty. They must now provide urgent clarity on how this further delay will enable our members to fully reopen their businesses as soon as possible. Critical to the recovery of our sector is the ability to simply trade free of restrictions and be able to plan for the future.”
CAMRA has now joined the BII and other trade bodies in writing to the Prime Minister pleading for extra support, and you can read their letter here. Reacting to the BII survey, CAMRA National Chairman Nik Antona said: “This is grim news for hard-working publicans across England who have been subjected to unfair and unevidenced restrictions from Government throughout the pandemic. This is also bitterly disappointing for consumers, who are looking forward to a return to the authentic pub experience – with service at the bar and an end to restrictions on group sizes. Pubs matter to people and communities – it would be devastating for Government to let them fall at the very last hurdle. That is why the Government must announce top-up grant funding, extend the furlough scheme and business rates holiday, and do something to fix the rent debt crisis immediately.”
The British Beer & Pub Association (BBPA) has also weighed in, saying the delay in full reopening will cost pubs £400 million for this period alone or £100 million per week of closure. Chief Executive Emma McClarkin said: “Delaying the removal of Covid restrictions by four weeks is incredibly hard for our sector to stomach. Pubs and licensees are struggling to recover with the current restrictions they face, and debts are accumulating. Every week the current restrictions stay and uncertainty continues, the likelihood of pubs being lost forever increases.”
All we can do as individuals is to support pubs as much as we can and urge others to do the same, and that’s the message Oxford CAMRA has been pumping out to local media this week. People may feel that going to the pub now is not the same experience, with table service only, a limit of six people from different households who can meet indoors, and the need to wear masks when not seated. But now, more than ever, pubs need our support if they are going to survive whether for a drink or a meal, or to order takeaway if available. It really is a case of “use them or lose them”.
Remember the old story about the shepherd who cries wolf so many times that nobody believes him, so when the wolf finally arrives it’s too late to save the flock? We can’t let that happen.