Hospitality Industry: Government Support

John Spellar Excerpts
Monday 11th January 2021

(1 month, 3 weeks ago)

Westminster Hall

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Department for Business, Energy and Industrial Strategy
Steve Double Portrait Steve Double (St Austell and Newquay) (Con)
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It is a pleasure to serve under your chairmanship, Mr Stringer. I rise to speak as the chairman of the all-party parliamentary group for hospitality and tourism. I thank all the petitioners who signed the petitions, in particular the 400 residents of the St Austell and Newquay constituency who put their name to a petition and whom I have the honour of representing.

I place on the record my thanks to the Minister: I believe that we have a Minister for hospitality—that may not be in his title, but I know from my work with him over the past year, he has always been available to me and colleagues across the House to address the concerns of the sector. He has also worked closely with the sector, so although I recognise the call for a Minister have “ hospitality” in his name, I do not accept the premise that we do not have a Minister for hospitality, because we very much do.

I also place on the record my thanks to, and recognition of, all hospitality businesses across the country for the way in which they have approached the past 10 months, and for the way in which they have adapted, taken a positive attitude to making their premises safe for visitors and worked together to get us through this pandemic. I thank and recognise them for all that they have done.

There is no doubt about the vital role that hospitality plays in our economy, as other colleagues have mentioned. One in six new jobs created over the past 10 years has been in this sector. It is a great vehicle for social mobility, for people from all sorts of backgrounds to get into a career and into management quickly. It impacts every community. The Government have recognised that with the unprecedented level of support that they have given to the sector. Although I would join calls for the need for more support, we should recognise the incredible support that has been put in place and is very much welcomed by the sector.

One of the key points to reinforce, which I do not think has been fully recognised in the support that the Government have made available, is the impact on hospitality of having to close quickly when decisions have been made to protect public health. Those decisions have been right, but the impact that they have had on the hospitality sector has been disproportionate. It is very different for a clothes shop having to close—six or 10 weeks later, the clothes will still be there. The food in the fridge and the beer in the seller will not last, however, and has to be thrown away. More support needs to be given to the sector to recognise that.

I join the calls made by many others: we need to extend the support for the sector. I very much look to the Chancellor, in the Budget, to extend the VAT cut—many businesses have not been able to make use of it, because they were closed for so long—and the business rates holiday. I would add that the opportunity should be taken to reform business rates in this sector. They have been unfairly impacting the sector for far too long. Let us take this opportunity to reform business rates, as well as extending the holiday.

John Spellar Portrait John Spellar (Warley) (Lab)
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The fact that there are two petitions shows how important this issue is. To my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), I would say that Marston’s is an excellent brewery that really looks after the trade.

The hospitality industry is a huge driver of our economy, as many hon. Members have said. It employs millions directly and in its supply chain. It is an energetic innovator—my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) talked about how it responded to the pandemic and how businesses opened. In many small businesses, there are individuals who have invested their lives, savings and hopes in the industry and see them at grave risk.

The industry is also a vital part of our social fabric, our communities, our sense of self and our wellbeing. Our hospitality and entertainment environment is one of our big attractions to the wider world. It not only attracts tourists, but is one of the reasons why companies and workers come here, rather than go to many other countries.

Of course, the industry pays a huge amount of tax, but it is on its knees. It has been hit time and time again by Government restrictions, often brought in with notice of only a day or two. Pubs and clubs, restaurants and hotels, betting shops and casinos all put in huge effort and cash to make their premises covid secure and keep their customers safe. They were being responsible but, frankly, Ministers took precious little notice of that. They did not understand the industry and just shut it down at short notice because they wanted to be seen to be doing something.

What better example than the 10 pm curfew, which made no sense? Ministers took no notice of representations from those who work in the industry—especially pubs, restaurants and casinos. Incidentally, there was very little data to show that the industry was a major cause of the spread of disease. In fact, I talked to the public health officer in my area of Sandwell, and it was quite the contrary.

The petition for a Minister for the industry is perfectly understandable, because the industry falls between different Departments. It represents hundreds of thousands of establishments and falls between the bureaucratic cracks. It needs someone to be its champion in Whitehall.

One quick example is the coach industry. That key part of domestic tourism was left out in the cold, devastating thousands of family businesses and undermining the hospitality businesses they serve. The industry needs someone to understand the whole economic ecosystem and join the dots. A Minister might also have pointed out the chaos and waste that would occur when firms had to dump tonnes of food and barrels of beer because they were not able to plan. That was bad for the businesses and bad for the environment.

Mark Pawsey Portrait Mark Pawsey (Rugby) (Con)
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It is a pleasure to take part in this important debate after receiving 50 representations to do so from constituents, including from pubs—The Red Lion in Hillmorton, and The Griffin in Kingsway. I want to talk about the impact on supply, as one or two Members have already done. I spent 30 years as a supplier to the catering trade. In that regard, I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

We often appreciate things when they are not there, and we are missing our pubs, cafés and restaurants right now. When they are not operating, it has a significant effect on the suppliers to the sector. Although I welcome the support that the Chancellor has spoken about—he referred to £4.5 billion today—many of the suppliers are not receiving the same level of support as the trading companies. During the pandemic, we have seen food purchases transferred from out-of-home to in-home consumption, and the beneficiaries have been supermarkets, which have done well out of the restrictions. Most have reported higher sales. For example, Tesco sales were up 11% over the Christmas period.

It is often assumed by many that suppliers and food manufacturers are able to switch production and pivot to supplying retail, but catering and retail products are very different, and as a consequence those businesses are losing out. We have heard about the switching on and off of hospitality, which has led to a great deal of stock being wasted. The food supplier, Creed Foodservice, spoke at the weekend about £6,000 of milk going out of date because of the decision to close schools. It says that it has written off £150,000-worth of food since April.

The business I ran supplied tableware items—things such as paper napkins, table covers and Christmas crackers. I have to say that an awful lot of the crackers that were bought for Christmas in 2020 were not pulled. Now, they can be held in stock and used for another year, but of course that involves tying up capital and taking up warehouse space, which are costs to those businesses.

Food service businesses continue to pay bills such as rent, electricity for chillers and loan payments for vehicles that are often standing idle. Wholesale distributors are usually high-volume, low-margin businesses, and the fixed costs mean that a relatively small fall in sales has a disproportionate impact on profitability. Too long a period without profit will cause many suppliers to fail.

In addition, the catering trade—restaurants and pubs—often use the cash sales generated in the current period to pay for goods received in the previous period when they were trading. That has led to many suppliers becoming banks and funding their customers. There is very little action that those suppliers can take if the hospitality businesses do not have the cash to pay them. I hope that the Minister in his response will show his appreciation for the supply chain, as well as for valued hospitality businesses.