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Rishi Sunak is cutting short a trip to the United States for crisis talks with business chiefs as the spread of Omicron and health warnings wreaked havoc on hard-hit pubs and restaurants.
The Chancellor has been criticised for going on the trip as the coronavirus variant’s spread led to a wave of cancelled bookings and falling takings across the hospitality sector.
UKHospitality boss Kate Nicholls and pub chiefs have made a plea for business rates relief and VAT discounts to be extended, warning that the sector has been knocked harder than expected by the new restrictions.
Ms Nicholls said hospitality sales have already plunged by more than a third over the past 10 days with £2 billion of trade already lost in December.
It comes as the CBI also urged the Government to provide support “in lockstep with future restrictions”.
Mr Sunak and the Treasury team spoke to both organisations – as well as hospitality firms including Prezzo, Nando’s, Whitbread, Greene King, Black Sheep Brewery and Adnams – on Thursday.
Speaking to broadcasters from the United States, Mr Sunak insisted the Government was “not telling people to cancel things” and was “not closing down businesses”.
But he said: “I appreciate that it is a difficult time for the hospitality industry, that’s why I was on the phone earlier today with various industry leaders from the hospitality space.”
The “good news” was that support measures already existed for the sector, Mr Sunak said, highlighting business rates relief, a reduced rate of VAT and around £250 million of public money available through local authorities.
“My immediate priority is to make sure that money gets to those businesses as quickly as possible,” he said.
The Chancellor said his “long-planned” trip to the US was aimed at “bringing investment and jobs and new products and services to the UK”.
“But of course I understand the concerns of businesses at the moment, given everything that’s going on, that’s why I have been in touch with hospitality industry leaders today, my team are hosting roundtables and talking to them.
“And it’s why I have curtailed my trip and I will be leaving earlier tonight and I will be back in the UK tomorrow.”
Shadow Treasury chief secretary Pat McFadden said: “Why did he decide to proceed with a trip to California on Tuesday when it was already clear that UK businesses were struggling to cope with what the Prime Minister himself has called a ‘tidal wave of Omicron’?”
Consumer confidence has been knocked by new restrictions and increasing health warnings.
England’s chief medical officer Professor Chris Whitty has advised Britons to consider cutting back on socialising around Christmas, while Prime Minister Boris Johnson said people should “think carefully” before going out to celebrate.
Ms Nicholls said: “Christmas trade is always crucial for the hospitality industry, making up as much as a quarter of the year’s profit for many businesses.
“Last year, Christmas was cancelled and so much rested on this December period for businesses already staggering under a burden of debt incurred from the pandemic and facing rising costs across the board.
“If operators are unable to trade profitably over the next month, many will simply not survive – and those that do make it through face a return to 20% VAT in April.
“The Government must step in now and provide measures that support the businesses and jobs in the sector – by committing to keeping VAT at 12.5%, suspending business rates payments for the first quarter of 2022 and reinstating recovery grants.”
The British Beer and Pub Association wrote to the Chancellor to highlight the “devastating impact” of the latest coronavirus restrictions and guidance, with an estimated three million Christmas bookings cancelled in the past week.
The combination of the Pan B restrictions and Prof Whitty’s comments meant “consumer confidence has been hugely undermined”, chief executive Emma McClarkin said.
The boss of Greene King, one of the UK’s biggest pub groups, said some its London pubs have seen sales down as much as 70% compared with the same week in 2019 amid a wave of cancellations.
Chief executive Nick Mackenzie said: “The guidance from Government to limit social interactions and shift to working from home has put our industry into lockdown in everything but name.”
Patrick Dardis, chief executive of the 220-strong Young’s pub group, said: “I have no idea where Rishi Sunak is right now but he needs to show up and give the industry his backing.”
Firms across the sector are asking for an extension of the discounted 12.5% VAT, which is due to revert back to the original 20% rate in March next year, with UKHospitality also pushing for a deferral of business rates.
Earlier this week, the International Monetary Fund said Mr Sunak should be “ready to deploy” a mini form of furlough support in the event of widespread closures to help sectors suffering the most, such as hospitality.
Rain Newton-Smith, CBI chief economist, added: “Further support for struggling firms will be needed if fresh government public health measures prevent firms trading their way to recovery.”
Michelin-starred chef Tom Kerridge has highlighted the suffering in the sector when he revealed one of his restaurants has seen more than 650 cancellations in the past six days due to Omicron fears.
Dominic Paul, chief executive of takeaway chain Domino’s Pizza, said parts of the hospitality industry “are going to have a really tough few months”.
He added: “The Government showed a real willingness to support the industry before and I think they probably will again.”