By Kunal Sawhney, CEO of Kalkine (www.kalkine.co.uk)
The hospitality industry in the United Kingdom is one of the worst affected sectors due to prolonged lockdowns and trading restrictions. British pub beer sales touched its lowest levels since the 1920s falling by over 56 per cent to £6.1 billion in 2020, according to the British Beer and Pub Association. Sales volumes dropped by £7.8 billion in 2020.
While the existing government schemes have provided some sup- port to the industry, but that has not been enough to offset ongoing losses incurred by the businesses. According to the BBPA data, beer volume sales in the first lockdown in Q2 2020 fell by a whopping 96 per cent, while government schemes such as the ‘Eat Out to Help Out’ scheme and lower VAT rates helped pub beer sales to fall only by 27 per cent during the summer period.
The trade body forecasts 60 per cent of British pubs will not be able to reopen even if outdoor services are allowed following the lockdown relaxation in April.This would affect up to 29,000 pubs. Furthermore, beer garden services will also be impacted by unpredictable weather, limited capacity, and other logistical challenges, which can lead to a loss of £1.5 billion in turnover.
UK-based pub chain Wetherspoon chairman Tim Martin said that the pubs being severely impacted due to restrictions that have also affected its finances. As pubs account for a sizeable share in government taxes, the tax collections this financial year have also witnessed a larger indirect loss, Martin added.
The pub chain had generated £6.1 billion in taxes in the last decade. Moreover, the company, customers and employees had generated a cumulative of £764 million in taxes during FY2019, accounting for approximately just 0.1 per cent of the UK government’s tax collections in the same year.
Several pub businesses have similarly contributed to tax collections, indicating that such continued rules would hamper the economy on a deeper scale than previously expected.
RECOMMENDATIONS TO THE GOVERNMENT
Industry leaders are calling for a comprehensive and well supported government action to help in the recovery. Some urgent actions that Chancellor Rishi Sunak can undertake to see some positive changes in the sector
• A hefty beer duty cut.
• Permitting pubs to reopen simultaneously as other non-essential stores.
• Relaxation and eventual removal of restrictions, which primarily includes serving alcoholic drinks with a meal, same household customers, 10 PM curfew, and others.
The above recommendations can go hand in hand with the broader hospitality industry’s suggestions of providing clear timelines and a recovery roadmap, financial support to bridge the gap for businesses, the extension of lower VAT rates and business rates holiday.
The Boris Johnson government said it would unveil its plan for reopening the economy after 22 February.A government official said the Johnson government has created a comprehensive and generous business support package worth £280 billion.The package includes several key components previously propounded by industry experts, including a one-time grant worth £9,000, an extension of the furlough scheme, subsidised VAT rates, numerous credit schemes and business rates holiday.