Covid-19: Hospitality Industry

Part of the debate – in the House of Commons at 4:49 pm on 24th March 2021.

Alert me about debates like this

Photo of Selaine Saxby Selaine Saxby Conservative, North Devon 4:49 pm, 24th March 2021

I beg to move,

That this House
has considered support for the hospitality industry throughout the covid-19 pandemic.

I thank the Backbench Business Committee for granting the debate, and Ruth Cadbury for co-sponsoring it. Without a doubt, the hospitality sector has been one of the hardest hit throughout the ongoing covid-19 pandemic. It will have been shut for 10 out of 14 months when it eventually reopens. I do not believe that many of us foresaw that a year ago when we entered the first lockdown.

Support for the sector is extensive across the House, as shown by the number of contributors today. This debate is almost as booked up as I understand much of the hospitality sector itself is, when allowed to reopen. With that in mind, I will keep my remarks brief and will not take interventions, to enable as many colleagues as possible to speak.

In 2019, the hospitality sector contributed £59.3 billion in gross value added to the UK economy—around 3% of total UK economic output. At the start of last year, there were almost a quarter of a million hospitality businesses in the UK. The sector is vital to my North Devon constituency, which is proud to boast 105 pubs, with almost 10% of all businesses being in the hospitality sector.

The latest research by UKHospitality shows that the sector will have lost £86 billion in revenue by the end of March 2021, down 68% on pre-pandemic figures. It would have been more were it not for the unprecedented support packages given by the Chancellor, combined with the innovation shown by the sector in adapting their businesses to become covid compliant, increase outdoor capacity, and become take-outs. Our North Devon “Take Out to Help Out” competition saw thousands of residents vote to support their favourite take-out that has helped them through lockdown, and many congratulations to the winner, Nartnapa Thai Kitchen in Lynton.

The sector is also wracked with coronavirus-related debt—an estimated £2 billion in rent debt and £6 billion in loans and other finance—which makes the recovery that bit more challenging. As someone who ran a debt-financed small business for 15 years, I know the toll that that type of balance sheet can take on small and medium-sized businesses, of which the sector has so many, and the extra pressure that it puts on achieving profitability, particularly for seasonal businesses that are so dependent on their summers to see them through the lean winter months.

Even assuming that the road map stays on track, the sector cannot fully reopen until 21 June. Some 60% of pubs may not reopen on 12 April, despite the Government’s relaxing regulations to enable them to trade outdoors more easily. That will mean that the support will taper off before there is a full return to profitability, which is forecast to take at least six months after the restrictions are fully removed. In short, the Government support may be ending too early relative to their lockdown-lifting road map.

This summer will no doubt be busy for UK hospitality. We know that pubs are one of the top three reasons tourists visit the UK, so their survival is linked to our inbound tourism and its associated economic benefits. As we move into winter, wet-led pubs in particular are very dependent on their locals returning to the bar, which we know did not happen to historical levels last winter. Going back to the pub is a much easier ask than so many of the others that we have endured over the last year, but have our behaviours fundamentally changed during the pandemic? I hope not, as in many rural villages in constituencies such as mine the pub is the heart and soul of the village. We need to ensure that they can return to their former vibrancy at last orders.

Calls are increasing for a review of beer duty to target support into our pubs, bars, and clubs, which could be balanced with duty rises in the off-trade, given the ever growing debt that the country is in. The Chancellor has shown throughout this pandemic how quickly he and his colleagues in the Treasury can pivot and adapt to create new lifelines for businesses. While I pay tribute to his excellent work, perhaps the job is not yet done for hospitality.

I believe that a draught beer duty would be targeted, quickly actioned support and could play a crucial role in stopping so many of our vibrant pubs and other hospitality businesses from going under later in the year. Our pubs provide a safer environment for alcohol consumption than elsewhere, and we should do all we can to encourage people to return safely as soon as possible.

There are now 600,000 fewer jobs in the sector than before covid hit our shores, despite the unprecedented support of furlough. As hospitality businesses look to reopen, I hope that they will engage with the new Government packages to get people back into work, such as the kickstart scheme, and reach out to their local Jobcentre Plus. I know that in rural North Devon, hospitality businesses have not always engaged with their local jobcentre, with local ads or posters in the window historically sufficing, but a wide range of highly qualified people are now unfortunately looking for work and vacancies may well be filled more rapidly through this route than those pre-pandemic.

There are other areas in the broader hospitality sector whose pandemic has also been problematic, such as our contract caterers and wholesalers. These businesses were not required to close, but their trade has been limited mostly to the public sector, and they have unfortunately missed out on many grant payments. Breweries, especially local microbreweries such as GT Ales in Wrafton, despite reinventing themselves for home delivery, have had a challenging time.

The wedding industry and its supply chain, quite rightly, have been repeatedly highlighted as a sector in need, the important big day being intricately linked with hospitality. It is estimated that more than 200,000 weddings have been either cancelled or postponed since the first lockdown and that the sector to date has lost at least £6.4 billion, a figure that continues to rise. It is fair to say that the hospitality sector has received an unprecedented level of support across VAT reductions, business rate holidays, grants, loans, the job retention scheme, the freezing of alcohol rates and a wealth of other measures.

I have been in contact with my local hospitality sector and the national hospitality sector throughout this pandemic, and I very much hope that dialogue will continue as we emerge and build back better. The Chancellor said that he would do “whatever it takes” and indeed he has, but to prevent our vital and much loved hospitality sector suffering from long covid, they may just need a little more creative support in the coming months.