Hospitality Industry: Government Support

Rupa Huq Excerpts
Monday 11th January 2021

(1 month, 2 weeks ago)

Westminster Hall

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Department for Business, Energy and Industrial Strategy
Greg Clark Portrait Greg Clark (Tunbridge Wells) (Con)
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It is a great pleasure to reverse roles, Mr Stringer, and to serve under your chairmanship.

Nearly 10 months ago, I asked the Chancellor in an urgent question to bring in an arrangement to reverse the usual flow of funds from businesses to Her Majesty’s Revenue and Customs, and for the nation to pay the wages of people if—and only if—their employers committed to keep employing them. At the time, I asked for that to be done for a few weeks, but 10 months later it shows how little we knew about the virus then that we should still have in place now what became the furlough scheme. I commend the Chancellor for a crucial intervention that saved millions of jobs that would otherwise have been lost. However, having come this far, and after the investment that has been made in keeping these businesses and jobs alive in the hospitality sector, we must make sure that we get through the next few weeks, so that they can continue to thrive in the future.

The furlough scheme, the business rate holiday, the hospitality grants, the discretionary grants, the VAT cut, the bounce back loans and eat out to help out have all been deployed to help hospitality businesses. However, just as the Government did not expect that this pandemic would be with us for what will soon be well over a year, neither did hospitality businesses, many of which are small, personally run and without access to resources and cash. Yet these are the pubs, cafés and restaurants that will be at the forefront of the recovery when lockdown ends—the first to give job opportunities to young people, to give business to their suppliers and to attract people back to our city centres, high streets and villages across Britain. They will also be first to pay their taxes to the Exchequer.

Last Friday, I met—virtually—several of the people who run hospitality venues in Tunbridge Wells and in Tonbridge and Malling, in a meeting arranged jointly with my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat). In a survey of 36 local hospitality businesses, they established that in the year before the pandemic they had collectively paid £4.4 million in VAT and pay-as-you-earn, and that the value of grants and furlough payments to date that have been paid to them is around £3 million. So whatever the precise figures, the point is that these businesses pay their way, and if they manage to survive they will thrive in the future and help to repay the sums that have been set aside during these last few months.

The requests of the businesspeople I met are straightforward, to make sure that they can get through the next few weeks. They ask for the Government to reconsider the requirement to pay national insurance on furloughed employees, given that, at the moment, zero revenue is coming in; to extend the business rates holiday and VAT cut, to reflect the fact that the closure of businesses has been for much longer than was expected; and to extend the terms of the loan scheme, so that these businesses can finance themselves for these crucial few months and so that, at the end of that time, everyone in this Chamber can join together and look back at a pandemic that is over, raising a drink and celebrating the success of continuing businesses.

Rupa Huq Portrait Dr Rupa Huq (Ealing Central and Acton) (Lab)
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To say that the coronavirus has been a shock to the system is an understatement. What was once a health crisis spread quickly to become an economic crisis—indeed, the biggest recession on record. The multimillion-employing hospitality industry has been particularly hard hit, adding to existing, pre-covid woes over Brexit supply chains and the loss of its international workforce. Hospitality drives the health of our high streets and the viability of our suburbs and towns. A lot of these business are family run—I know: my late dad was an Indian restaurant person himself. All of these things are now facing existential threat. At the other end of the scale, the collapse of big chains such as Carluccio’s, Pizza Express and even Jamie Oliver outlets would ordinarily be big news, but these are not ordinary times, and with the worst death toll in Europe, we hear barely a whisper about them.

I never thought I would live to see the day when a Conservative Government would forcibly shut down businesses, but here we are again. A dedicated Government Minister for hospitality would give food, beverage and leisure accommodation a proper say, rather than them always being an afterthought, suffering the consequences of the latest failed experiment—the tiering system, the 10 pm curfew or whatever it is. At a time of distancing and isolation, a sector based on togetherness and sociability cannot exist on takeaway only. This sector spent a fortune on remodelling, even though social distancing slashes the number of covers available: people instituted one-way systems, enhanced cleaning, and screens to create a covid-secure environment, all seemingly now for nothing. These people are famed for hard work and resilience, but they cannot run on empty, and no one clapped when they provided meals for NHS staff or for children, outside of the Government’s initial, cruel insistence that they would not run the free school meals scheme in the holidays.

Coronageddon should not relegate hospitality to being the easiest lever to pull: first into lockdown, last out, in this zig-zag, stop-start way. These businesses need cash flow, and they need to plan for things like fresh produce orders and staffing rotas. As the MP who first spoke of a “curry crisis”, I implore the Minister: the sector is fighting for survival, and bold action is needed. Now is the time for a dedicated Minister, plus additional financial support, extending furlough and rent, rates and VAT relief, because we will all need restaurants, hotels and pubs. Some 56 pubs a week are closing at the moment; that is a matter of shame. We will all need them to get us out of the other side and build consumer confidence.

Jane Hunt Portrait Jane Hunt (Loughborough) (Con)
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I first declare an interest, in that my husband works for a logistics company and deals directly with the hospitality sector in his role.

Looking at hospitality as a whole, we must first recognise the level of support that has been received generally within the sector throughout the covid crisis. However, three main themes are of great concern. The first is that there are many supporting and spin-off businesses that co-exist within this sector, but that seem not to have been included in all aspects of the support offered. The second is that the prolonged period in which the sector and those spin-off businesses have had to endure no customer revenue is stretching the limits to which they can wait for the sector to reopen once more, and the third is the lack of customer confidence in when the sector will be able to trade again.

A great many businesses in Loughborough are either directly part of, or related to, the hospitality sector: pubs, restaurants, cafés, bingo halls, nightclubs, bed and breakfasts, and hotels are obvious examples, and we have 290 such businesses locally, employing 3,000 people. We also have conference organisers, wedding event organisers and venues, lighting and audio technicians, event carpet and equipment suppliers, hair and beauty technicians, florists and printers, food production plants, breweries and catering equipment suppliers. Everything from hiring a tablecloth to arranging a major corporate event in Kuala Lumpur can be obtained from businesses in Loughborough. We are a very hospitable place.

Before covid, all of these business were not only viable, but thriving. However, economic output in this sector was down 92% in April 2020 compared with February 2020. If we want a V-shaped recovery, we must plan for one and support the businesses that will deliver it. For example, I understand that 264,000 weddings were missed last year. There will be pent-up demand, but if there are no businesses to deliver the events and services when we open up once more, that demand will not be met, and tax revenues will not materialise. There are revenues to be had: 475,000 weddings are currently scheduled for 2021, getting on for double the usual amount, creating the potential for an additional £25 billion in the sector. However, a lack of confidence that events will be allowed to go ahead means that weddings for spring and summer are already starting to be postponed and cancelled. In the meantime, finances are stretched to the limit for the whole of the hospitality sector, while businesses wait for permission to operate again. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) will present a 10-minute rule Bill tomorrow, advocating the abolition and reform of business rates. That would really help pubs and other hospitality outlets, both with immediate effect, and into the future, giving pubs the chance to remain the centre of our communities. In supporting my colleague’s aim I ask that business rate relief for the hospitality and leisure sector be extended for a further year to include related businesses during the pandemic.

The best way out of this crisis, for business, is to be able to trade. For businesses to be able to do that with confidence, we need the people we are most concerned about in our communities to be vaccinated, and we are well on the way to achieving that—

Break in Debate

Paul Scully Portrait Paul Scully
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I will not give way, just so that I do not run out of time, but I will come back to the hon. Gentleman in a second.

Like those who have taken the time to sign a petition, and those right hon. and hon. Members who have taken part in today’s debate, I recognise the importance of the hospitality sector, not just to local areas but to whole communities and to the country as a whole. We have heard that the sector employs around 3.5 million people overall, and in normal circumstances generates revenues of around £63 billion a year. It is strategically important to the UK, as well, traditionally being the first sector to recover following an economic downturn and acting as a catalyst for wider economic recovery and regeneration.

Most importantly, the sector lies at the heart of communities, providing jobs and places to enjoy companionship and supporting mental health and wellbeing, social cohesion and cultural integration. It is important that when we talk about culture—about meeting people—we remember that that is what hospitality is there to do, and it is really sad that the restrictions and lockdown itself are there to stop people meeting people. As we have heard, though, that is not to say that hospitality in itself is the vector for transmission. It is really important that we do not scapegoat the hospitality sector, which has done so much—it has spent a lot of money and put in a lot of effort—to make its venues covid-secure.

Turning to the question of establishing a Minister for hospitality, responsibility is currently split between BEIS and the Department for Digital, Culture, Media and Sport: BEIS is responsible for the food and beverage industries, and DCMS is responsible for accommodation, primarily hotels, as part of its tourism remit. There is clearly some overlap between these important industries, and I work closely with the Minister for Sport, Tourism and Heritage at DCMS, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), to ensure that the interests of this sector as a whole are fully represented across Government.

The close collaboration that we have means that the policy levers in both DCMS and BEIS can be employed effectively to the benefit of the sector. Clearly, it is not within my gift to create a new ministerial post—that power rests solely with the Prime Minister—but I can assure hon. Members that the two of us are doing all we can within Government to understand and represent the interests of the sector. Whether or not we have a dedicated Minister for hospitality, we need to ensure that the sector is in the best possible place to bounce back from covid-19, so that it can play a leading role in the UK’s economic and social recovery.

We know that the hospitality sector has often shown great resilience and innovation in adapting; such adaptation is not a new phenomenon. We saw that hospitality was one of the first sectors to recover after the 2007 financial crisis, which helped drive the UK’s recovery more generally. In order to achieve the same level of recovery that we saw following that crisis, we are committed to maintaining support to the sector until the vaccines are rolled out and businesses can open without restrictions. However, we also need to think about and plan for the longer-term recovery.

The UK has a world-leading net zero target. I want to see the creativity that helps define the hospitality sector put to good use in helping to tackle climate change, by developing and utilising new technologies and processes to minimise emissions and, importantly, waste. Although this is a challenging time for the sector, it is essential that, as we bounce back, we work with hospitality businesses to build back their industry so that it is stronger and greener.

I thank the hon. Member for Brighton, Pavilion (Caroline Lucas), who was unable to attend the debate today but sent me a statement from hospitality businesses in her constituency, supporting the creation of the ministerial position and emphasising the important role that the sector will need to play in our economic recovery and growth. I hope that I have addressed both those points.

We have had a very interesting debate, starting with the hon. Member for Strangford (Jim Shannon). One of the regular calls that I have with the industry includes Colin Neill from Hospitality Ulster. We also heard from the hon. Member for North Antrim (Ian Paisley), who talked about Van Morrison. Actually, a Van Morrison gig was one of the last gigs that I went to at the O2, to raise money for the Royal Marsden Hospital. The O2 itself is now one of the nightingale hospitals, and one of the people who set it up was the chief nurse at the Marsden—everything comes around in a circular fashion, which shows the unusual times we are in.

With regard to the coffee culture that my hon. Friend the Member for Winchester (Steve Brine) talked about, we should not forget that takeaway coffees also play a part for shift workers, who need such extra support, so not everything that is seen as non- essential is non-essential to certain people.

There is no way we can have a one-size-fits-all policy. Certainly what I have learnt about the hospitality sector over the past nine or 10 months is that a lot of work is being done behind the scenes, whether with me or with my hon. Friend the Minister for Sport, or through lobbying by Colin Neill, Kate Nicholls or Emma McClarkin, or through lobbying from the chief executives of the larger pub businesses, the independent pubs, the restaurant groups and all those sorts of businesses. That means we can address issues such as the 10 pm curfew, which was a blunt instrument, as has been outlined. It clearly stopped restaurants having second sittings, but it also stopped pubs selling a lot of alcohol at that time—a lot of their profit is created at that time but it was also pushing people together. I am also the Minister for London and I saw at that time a 40% increase in the use of the tube between 10 pm and 10.15 pm. The curfew was clearly pushing people together, doing the opposite of what we wanted. It was therefore right to make the case against it and have it reversed.

Rupa Huq Portrait Dr Huq
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Will the Minister give way?

Paul Scully Portrait Paul Scully
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I will not give way, because I have only a couple of minutes left and I want to give the hon. Member for Newcastle upon Tyne North a little time to respond to the debate.

From my business role through to my work with the hospitality sector, and in my work as Minister for London, I can see that any town centre, any city area or any retail area is an ecosystem. People do not go to a hotel, such as those within a mile or two of where we are now, just to sleep in another bed; they go because they want to spend time in the pubs, restaurants, theatres, museums, galleries and all the things that a city such as London has to offer. It is the same with Newcastle, Manchester or any of our fantastic towns across the country, and clearly it is also the same for rural areas such as Cornwall, which my hon. Friend the Member for Southport (Damien Moore) mentioned when he talked about tourism in his part of the world.

Indeed, that is a really interesting point about tourism in coastal or rural areas in particular, because we are now in the third winter of their three-winter scenario—we had the winter last year; then we had the summer, when they would expect to make a lot of their profits but effectively it was a winter for them; and now, as we can feel here in Westminster Hall today, this is really a third winter. It is important that we continue to work very closely with those areas.

I am more than happy to work with all hon. Members to ensure that we do not just hear the understandable cries of anguish from the hospitality sector, but work out what we can do, given the public finances, to continue to flex, work on the recovery and look at how we can stagger the reopening. In a few weeks’ time, we will get to the point with the vaccine roll-out, hopefully alongside the plateauing of the case load, at which we will have a better idea of the timescale and can start talking about a road map.

I know, because we talked about this last summer, that businesses, especially the bigger ones that have greater resources and can do that sort of forward thinking, will already be thinking about how to roll out the reopening of pubs, restaurants, cafés and, importantly, the wedding sector, which my hon. Friend the Member for Loughborough (Jane Hunt) mentioned. I would love to get to that point, whether through pilots or just through working with the wedding sector, which is understandably filling my timeline on Twitter and social media—I can see exactly why it is doing that. After that, we can deal with the nightclub sector—we heard about Sacha Lord, who does a remarkable job in raising these issues with me and colleagues—which is a really tough one to crack. Hopefully we can get to the point where it can open.

I could go on forever, but I want to leave some time for the hon. Member for Newcastle upon Tyne North. Hospitality brings people together. We have heard a lot of calls for the evidence for why various measures were put in place. If hon. Members look at the infographics and the rules and guidance for this particular part of the lockdown, they will see that there are three words at the top of pretty much every page: “Stay at home.” Unfortunately, that is what everything is about. It is not about meeting. This will be a really tough few months, because it is miserable outside. With regard to exercise and so on, it is not going to be good. We need to offer hope to those businesses and get them across the finishing line so that we have a better summer and ensure that we do not have a fourth winter.

The hospitality sector represents friendship, generosity, enjoyment and happiness. It is a tonic for loneliness and a warm welcome for visitors at the heart of our communities. In short, hospitality matters. We will continue to work with hospitality businesses to get them through the immediate crisis and then help them to build back stronger and greener.