Hospitality Industry: Government Support

James Wild Excerpts
Monday 11th January 2021

(1 month, 2 weeks ago)

Westminster Hall

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Department for Business, Energy and Industrial Strategy
Ben Lake Portrait Ben Lake (Ceredigion) (PC)
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It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful for the opportunity to contribute to this debate and to speak in support of an industry that is important to Ceredigion. Taken together, hospitality businesses, such as restaurants, cafés, pubs and bars, and the events catering industry employ about 4,500 people in my constituency, equating to more than 16% of all employees, and that is without accounting for the many supply chain jobs that depend on the sector.

For these businesses, measures such as the furlough scheme have proved invaluable, with more than 7,500 workers in Ceredigion supported by it in the early months of the pandemic. Both the VAT reduction and the business rates holiday were warmly welcomed. There can be no denying that these interventions offered the sector lifelines as the pandemic hit and that the Chancellor of the Exchequer was right to bring forward support measures such as the furlough and the self-employment income support schemes, even though they required extraordinary public expenditure. There are strong arguments in favour of continuing this level of intervention for some time yet.

The vaccination programme offers us some hope that we will see the level of covid disruption reduce significantly this year, but hospitality businesses across Ceredigion tell me that they are deeply concerned about their immediate prospects for survival. The hoteliers, restaurateurs, café owners and landlords I speak to fully understand that the pandemic was never going to be an easy time. Their expectations have long been calibrated to focus on basic survival. Support measures have been welcomed, but much of the grant funding has long been spent to cover fixed operating costs that simply cannot be avoided. Too many owners, ineligible for the Government’s income support schemes, have had to deplete their personal savings in order to keep their businesses afloat and their employees in jobs.

The Treasury has received details from the Federation of Small Businesses of a proposal for a directors income support scheme, which I urge the Treasury to consider adopting, as it would help many of these small business owners. I also support the proposals made this afternoon, such as the one-off grant to help businesses to bounce back once restrictions have been eased, and the proposal to pause national insurance contributions for furloughed employees as a way of alleviating the burden on businesses that are still, in many instances, required to remain closed by law.

To inject some much-needed confidence into the sector, I urge the Treasury to consider extending the business rates holiday for the forthcoming financial year, as well as extending the hospitality VAT reduction scheme into 2022. I am aware, of course, that such measures would mean further significant expense for the Exchequer, but I argue that that would be money well spent. Not only would it give businesses in such an important sector the support that they require to see out the pandemic, but it would avoid a terrible situation whereby businesses that have previously received Government support are forced to close for good, leaving their employees without a job and previous Government support or investment being made in vain. In other words, do not spoil the ship for a ha’porth of tar.

James Wild Portrait James Wild (North West Norfolk) (Con)
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It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this debate.

The restaurants, pubs, hotels, bed and breakfasts, campsites, attractions and other businesses that make up hospitality are a vital part of North West Norfolk’s economy, contributing around £500 million a year and making up about a fifth of the jobs, and 2019 was a record year for that sector. Of course, last year it was a record in the opposite direction. That collapse in demand and the redundancies have hit younger people disproportionately. In these challenging times, the Crown Inn, the Rose and Crown and other premises have adapted by selling takeaway meals, but not being able to sell alcohol in closed containers with those meals is unfair and is having a damaging impact. The rules should be changed. Where there are issues, enforcement should be taken rather than this blanket approach.

These businesses are at the heart of our community. We have only to look at venues such as Bank House, the Anvil Inn and many others that, unable to open, have offered their premises as vaccination centres. Given their importance, my constituents are grateful for the support that the Government put in place to help them bounce back. That has provided a lifeline, but I have been contacted by many businesses that signed the petition and which say that the new lockdown gravely threatens their future after months when they have been unable to open properly and unable to trade. The one-off grants of up to £9,000 are very welcome, but many employers have taken on considerable debt and have to cover national insurance costs for staff who are furloughed. Those businesses tell me that more help is required. It would be tragic, as others have said, if the benefits of the support to date are lost if firms are unable to hang on until the vaccination programme has had the impact that we all hope for.

In July my right hon. Friend the Chancellor responded to calls that many others and I supported to cut VAT to 5%, but the tier restrictions and national lockdown mean that businesses have not had the benefit from the cut, as had been expected, so the cost to the Treasury has been lower. I support the sector’s calls, and I hope the Chancellor will look favourably on continuing that reduction until the end of the year. Extending that and the business rates holiday will help firms to survive and be there when the reopening comes. We all look forward to that reopening as the vaccination programme rolls out to the most at-risk groups. People crave normality: meeting for a meal, going to the theatre and having a pint in a pub. We want those places to be there, so we need a road map to get there.

Finally, we need further action to help the sector. One opportunity is through the Government’s new tourism zones. Norfolk and Suffolk have developed a strong case with a proposal to be the most sustainable place for tourism in the country, with a strong skills offer for young people. The hospitality sector is crucial to our economy and our wellbeing. I urge the Government to continue their unprecedented support and ensure it is well placed to help drive the economic recovery.

Stephen Doughty Portrait Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
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It is a pleasure to see you in the Chair, Mr Stringer. I second the comments of my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) on virtual participation in these proceedings. I hope that can come sooner rather than later. I also second many of her excellent comments in opening this crucial debate. It was disappointing to come to this debate after the Chancellor’s statement earlier—the first statement he has made in Parliament in 41 days. He had very little new to say. I think many of the hospitality businesses in Cardiff South and Penarth and in many of our constituencies would have hoped for something different, given the new and very difficult but necessary restrictions that they face.

I also second many of the points made by colleagues across the House about the support that will be required to ensure that businesses can come out on the other side of this when restrictions can eventually be lifted. I have had a huge number of emails from businesses in my constituency of Cardiff South and Penarth and from concerned constituents who point out that turnover across the sector is down by 40%, and that 41% of businesses might fail in 2021, yet one in six new jobs in the economy were created in this sector. I know that from my own constituency.

Even during the pandemic, businesses were able to set up, particularly during the summer period, and get going, but have found themselves in new difficulties. We have to remember that the sector is much wider than it appears on the face of it. It is not just the pubs, restaurants and cafés; it is also the food supply businesses, the breweries and the laundries—I have some major laundries in my constituency. It is the wider economy and all the jobs that come with it.

I commend the approach taken by the Welsh Government. A new tranche of the economic resilience fund was announced in December—£340 million for hospitality, tourism and leisure—on top of the £1 billion they announced to support businesses through rates relief and other measures, as well as the job retention scheme and the self-employment income support scheme. The new measures required new support, and on 18 December, they were announced with £110 million of support.

On the situation facing pubs in particular—my hon. Friend the Member for Warrington North (Charlotte Nichols) raised many of these issues—many local independent pubs in my constituency have contacted me in significant difficulties, but primarily I want to raise the case of Brains Brewery, one of the signature brands of Wales. Tragically, it has found itself in significant difficulties.

Brains has its headquarters in my constituency and has been brewing there for many decades. It is one of the things at the very heart and soul of Welsh culture or, certainly, of Cardiff culture, as anybody who knows groups like the Hennessys will know—they refer to the importance of Brains Dark and many other fantastic brews. Now, while more than 1,000 jobs have been able to be saved through a deal with Marston’s, the tragic possibility is that Brains beer will no longer be brewed in Cardiff.

I have been speaking with the Welsh Government, Cardiff Council and others, and I urge the Minister to consider what support can be given to breweries in particular, especially those with particular cultural and historical heritage in parts of the UK. I hope that he can address some of those concerns in his remarks.