Chancellor Rishi Sunak has announced a job support scheme, as well as extending the hospitality VAT cut until the end of March.
Photograph: Kamal H. licensed under CC BY-ND 2.0
He said the government will directly support the wages of people in work, giving businesses who face depressed demand the option of keeping employees in a job on shorter hours rather than making them redundant.
Mr Sunak said: “The jobs support scheme is built on three principles. First, it will support viable jobs. To make sure of that, employees must work at least a third of their normal hours and be paid for that work, as normal, by their employer.
“The government, together with employers, will then increase those people’s wages covering two-thirds of the pay they have lost by reducing their working hours. And the employee will keep their job.
“Second, we will target support at firms who need it the most. All small and medium-sized businesses are eligible. But larger businesses, only when their turnover has fallen through the crisis.
“Third, it will be open to employers across the United Kingdom, even if they have not previously used the furlough scheme. The scheme will run for six months starting in November.”
Employers retaining furloughed staff on shorter hours can claim both the jobs support scheme and the jobs retention bonus.
James Calder, chief executive of the Society of Independent Brewers (SIBA), said: “The chancellor’s announcement that a new job support scheme for people in work will be introduced from November is welcome and will protect jobs, however it does not address the serious issues facing the brewing and hospitality industries which have been amongst the worst impacted by coronavirus.
“Without targeted support for the beer, brewing, and broader hospitality industry, which has been specifically targeted by new restrictions, then we will see widespread business closures of breweries and pubs.
“Breweries have not had access to any of the business grants available to other hospitality businesses during coronavirus, and to avoid further business closures it essential that a targeted support package is introduced by government.
“Equally, whilst the extension of the VAT cut for hospitality is welcome for many pubs, it does not apply to beer or alcohol sales, so is not available to wet-led community pubs which do not serve food. Breweries and wet-led pubs are once again being left behind by the chancellor’s measures and without urgent support many will not survive the vital Christmas period.”
‘Hospitality needs more targeted efforts to support jobs’
Nik Atona, national chairman of the Campaign for Real Ale (CAMRA), said: “The jobs support scheme is a welcome announcement — we are glad that the chancellor has listened to industry calls for action on jobs. However, those jobs will not exist if pubs and breweries are not viable businesses.
“While we wait for further details, what we’ve heard does not go far enough to support pubs, especially wet-led pubs, or breweries and the wider supply chain which —as we’ve seen from recent industry statistics — is going to be massively impacted by new restrictions, with job losses and potential closures before Christmas.
“What the hospitality industry needs is a support package including an extension of the business rates holiday, grants rather than loans, consideration of a differential rate of duty on draft beer served in pubs and real support for wet-led pubs which cannot benefit from the VAT cut extension.”
UKHospitality chief executive, Kate Nicholls, said: “The announcement of flexible employee support is a move in the right direction, but hospitality needs more targeted efforts to support jobs. Almost one million people in our sector are still on furlough. We need government to go further in hospitality, recognising the greater restrictions imposed upon us, and pick up the full cost of unworked hours.
“This would be a relatively low cost for huge reward for our workforce. Full support to sustain people in their jobs during what could be a pretty bleak winter for hospitality would be a great step forward.
“Looking ahead, the extension of the VAT cut was absolutely critical. UKHospitality had pushed hard for it, so it is great to see the Government taking note of our major concerns about recovery into 2021, though this must be extended further. The announcement of longer tax deferrals and the option of longer loan repayments should deliver some much-needed breathing room for employers.
“Things were looking grim for our sector yesterday and we were desperately hoping for some good news. The chancellor has given us some reason to be positive again, but we urge him to engage with the trade on specific measures to keep people in work.
“While some of these measures announced today will give businesses a future to shoot for, and hope that they can begin to rebuild, we are still not out of the woods.”
Update: more reaction
Kevin Georgel, chief executive of St Austell Brewery, said: “We welcome the chancellor’s extension of the VAT reduction until March. However, if the new restrictions last up to six months, this support must be extended much further into next year to help hospitality businesses recover.
“Furthermore, while the extension of the VAT cut offers some breathing room for our sector, it does not apply to beer or alcohol sales, so is not available to wet-led pubs that don’t serve food. Cutting beer duty would offer these much-loved community hubs the urgent support they need, to keep their doors open.
“Today’s announcement about more flexible employee support is also welcome, but doesn’t go anywhere near far enough for hospitality. With significant cuts in operating hours and revenues, thousands of jobs are still at risk, due to the greater restrictions we’re now working under. The vast majority of hospitality businesses are still losing money or struggling to break even. Paying our teams to work part time only adds to this challenge.
“While today’s announcement was a step in the right direction, we need more support that specifically targets the hospitality sector, which has been hit harder and for longer than other industries. Crucially, this includes government support in helping to restore consumer confidence.”
Emma McClarkin, chief executive of the British Beer & Pub Association, said: “Following the additional restrictions announced earlier this week and their devastating impact on the already precarious situation our sector is in, we were really hoping for a strong package of support today. Some elements of the chancellor’s plan today are welcome, but do not go nearly far enough to save the thousands of pubs and jobs that we have highlighted are at serious risk.
“The new flexible job support scheme is needed considering that the furlough scheme will end next month, but with a lower level of funding from government that will cost employers more, we are not confident it is enough to protect jobs in the current trading conditions. We will need to closely monitor the effectiveness of this scheme with our members and invite the government to work with us if changes to the scheme are required.
“As brewing businesses are also greatly impacted by the curfew and the tighter restrictions pubs now face, they need more support too. With no direct support for them in today’s announcement, it is imperative that a beer duty cut is top of the list for the chancellor at the next Budget, which would greatly help wet led pubs too.
“It is very concerning to see the chancellor not extend the business rates relief for pubs. Pubs now face a cliff edge come March 2021 where they will have to pay on average £25,000 each per rate paying pub. That’s a cost of £800 million to the sector which will be the final straw for many pubs. We need the Chancellor to review this and extend the business rates holiday as a matter of urgency.
“Increasing access to government loans, and extending the lengths to pay them back, will help some pubs, but for many, taking on further debt in the form of a loan isn’t even a viable option — particularly at this stage.
“We need the government to recognise that consumer confidence is fragile and the additional restrictions that could be in place for a further six months will only make this worse. We are asking them to consider ways they can help boost consumer confidence including running the successful Eat Out To Help Out scheme again and offering sector specific grants for pub businesses.”
