Sector Laments Chancellor’s “Missed Opportunity” In Spending Review

Chancellor Rishi Sunak’s spending review which reveals that the country’s economy has shrunk by 11.3% the worst in 300 years has been dismissed as a missed opportunity to save hospitality and on trade sector jobs and his decision to invest in new jobs, but not do more to save thousands of pub jobs that already exist, is described as ‘staggering’.

The Office for Budget Responsibility (OBR) said the economy will not be back to pre-crisis levels until the end of 2022. The unemployment rate, currently around 4.8 per cent is set to peak at 7.5 per cent in the middle of next year, while the OBR suggests ‘scarring’ from the pandemic will be 3 per cent of GDP by 2025, equivalent to a £40billion black hole in the government finances

In his review the Chancellor has committed £2.9b towards the government’s three-year restart programme to help more than one million people who have been unemployed for over a year find new work. Unemployment in the second quarter of 2022 is expected to hit 2.6 million people.

He also announced a new levelling-up fund worth £4b for regional infrastructure, for which local authorities will be able to bid directly for up to £20m to fund local projects, for example, upgrading transport, new museums and galleries, and improving high streets and town centres.

The National Living Wage will increase by 2.2% to £8.91 for those aged 23 and over from April 2021.

With the tightening of restrictions and no additional support given to the pub sector today by the Chancellor, British Beer and Pub Association (BBPA) has said thousands of pub closures and job losses are now inevitable, unless the Government delivers the support pubs need as a matter of urgency.

Emma McClarkin, Chief Executive of the British Beer & Pub Association, said: “The lack of action by the Chancellor to save pubs and jobs by giving them the proper support they need is staggering. It seems pubs have now been cast adrift by the Government. To save businesses and jobs the Chancellor needs to come back to the House this week and set out an enhanced package of support ahead of the new tier system coming into effect.

“Not only is the Government unfairly rendering pubs unviable or forcing many of them to stay closed this Christmas, it isn’t even giving them the full financial support they need to survive. Whilst the news of a review of business rates reliefs in the New Year is a glimmer of positive news, it is not nearly enough.

“It’s all well and good investing in new jobs, but the actions of this Government are killing viable pub businesses and thousands of jobs that already exist. Yet the Government is not doing enough right now to help them survive nor Britain’s brewers that are reliant on them.

“If our sector isn’t allowed to trade properly, or at all, how on earth can the Chancellor expect it to survive and protect the livelihoods of the thousands of people working in it? Adequate grants need to be given to pubs urgently or they simply won’t survive the new tier restrictions or Christmas.

“The Government must do more to help our pubs, the livelihoods they support and the communities they serve across the UK. If not, this really could be the end of the pub in Britain as we know it.”

UKHospitality Chief Executive Kate Nicholls said: “Hospitality jobs are at the core of the grave unemployment forecasts the Chancellor announced today, yet the sector has shown repeatedly, most recently in August, how those jobs can help deliver economic growth for the economy. But it can only do so if it survives the winter, and that means getting the necessary support now. The increase to the National Minimum Wage will be a great benefit to many workers in our sector only if the businesses that employ them are still around.

“The hospitality sector is key in preventing unemployment getting out of control. The sector is being hit hardest by this crisis, but it is also the sector which could lead the recovery of the economy if given the chance. As demonstrated after the financial crisis in 2008, we can provide jobs, investment and opportunities in every region of the UK and the economy back up to full speed. Once the crisis has passed, people will want to go out for a drink or a meal, take a holiday or enjoy their newly gained freedom with their family and friends. Hospitality is central to all of this.

“We can only deliver the growth that the Treasury desperately needs if we survive the winter. If hospitality does not get the support it needs right now, businesses will fold and jobs will be lost. That is not just a disaster in the short term, it undermines the efforts to recover next year and into 2022. We have already lost 600,000 jobs. Support must be comprehensive and swift if we want to stop that figure from rising and avoid the nightmare of unemployment the Chancellor spoke of.

“A swift announcement to fill the gap in hospitality previously filled by the Job Retention Bonus, coupled with a solution on rents, is critical for immediate survival. Subsequent revival will be hugely benefited by then extending the VAT cut and the business rates holiday. Every venue that we can save now means jobs safe and secure as we look to rebuild.”

The Chancellor has failed to mention the need to address business rates in his Spending Review today, despite laying out plans for the UK economy and explaining that country faces an “economic emergency.”

According to John Webber, Heads of Business Rates at Colliers International, this is “Desperately disappointing”.  “The Chancellor said this Review was all about “Jobs, Jobs, Jobs”, but has forecast that, despite the measures he has revealed, the UK will see 2.6 million unemployed by Q2 next year. It is incomprehensible how he can say that on one hand, but then ignore the cries of crucial sectors of our economy, particularly the retail and leisure/ hospitality sectors, who need clarity over whether they will facing massive business rates rises again in April next year, once their Covid-19 business rates “holiday” comes to an end.”

“It’s also worrying that the Chancellor has not mentioned a timeline for when he will announce on the “Rates issue”. Although the statement today was not a tax review, it is inconceivable if he feels he can wait until the March Budget to discuss changes to the business rates system. By then many retailers will have made their plans for the forthcoming year and many of these will include closures and job losses in anticipation of the big bills coming through the letterbox.”

“We are also disappointed there was no mention of any form of business rates reform- despite promises that we would hear about that this Autumn. “

Business rates contribute £26 billion net to the economy, but the system, in its normal form, has been largely criticized as outdated and unfairly geared against the retail sector, putting bricks and mortar retailers at a disadvantage to purely on-line rivals or to other sectors. Criticisms were strong even before the impact of Covid-19 had taken its toll.