Businesses make their case to MPs for more support before reopening
Collectively, the pubs, hotels, restaurants and nightclubs of the UK have endured possibly the hardest 18 months they will ever experience.
Many haven’t opened their doors at all, have had to furlough staff and rely on other government backed support such as bounce back loans or CBILS borrowing and grants.
This has led to over £10 billion of collective pandemic debt being built up by these businesses.
Now, as the government prepares to hand over responsibility on Covid protection measures to these individual businesses, representatives of the hospitality, retail and property sectors have asked MPs for further additional, targeted support measures based on their experiences.
Their wish list includes:
- A revamp of business rates
- Arbitration introduced on outstanding rent debts
- An extension of payment terms for bounce back loans and CBILS
Members of the Business Select Committee heard from representatives of the various sectors this week to gain a fuller picture of the reality facing reopening businesses.
The British Property Federation put forward evidence that 25% of commercial landlords and tenants had yet to reach an agreement on repaying an estimated £6.5 billion in unpaid rent.
They warned that if no solution is found by the end of March 2022, when the moratorium on evictions for commercial tenants ends, then there could be widespread legal action and subsequent consequences for businesses that are delinquent.
The committee acknowledged that the government was planning on introducing some binding arbitration rules regarding outstanding rent soon but no further details have been announced.
Kate Nicholls of UKHospitality urged parliament to take action before they break up for the summer next week.
She said her members, made up of restaurants and hotels, were under increasing pressure as business rates relief and their contribution to staff furlough payments had begun to increase since the beginning of July.
According to their figures, UK hospitality businesses took out a collective £6 billion in government backed loans including bounce back loans, had over £1.5 billion built up in tax arrears and other private debts and had incurred over £2 billion in rent arrears built up during the pandemic and subsequent lockdown.
She said: “We’ve managed to keep bankruptcies and business failures to a relatively low level but I think we’ll see that picking up.”
Nightclubs in particular were keen to get clearer guidance on what their responsibilities will be for customer safety if they go ahead and reopen next week.
Michael Kill of the Night Time Industries Association told the committee: “There is a lot of confusion.
“The narrative seems to be that using the NHS Covid Pass will not be mandatory but if cases rise and the virus is not being controlled in certain spaces then they may well mandate it which could cause problems for our members.”
According to the latest guidance issued, “higher risk settings’ ‘ such as nightclubs will be encouraged to use the pass as a condition of entry.
While wearing face masks will no longer be mandatory the guidelines say they “expect and recommend that people wear face coverings in crowded areas such as public transport.”
They should also “meet outdoors where possible and let fresh air into homes and other enclosed spaces.”
Businesses will be pressured to implement these measures by means of a legal duty on employers to manage risks for people affected by their business including the risk of Covid-19 infection.
70% of nightclubs surveyed by NTIA said they didn’t plan to monitor customers’ vaccine status on entry although they would obviously consider doing more if the government mandated certification in certain venues.
A Nightclub owner outlined the dilemma in testimony. He said: “We are looking at how to open as safely as possible. We could ask people to use the NHS app but our research shows that people don’t want to.
“If we do an event and 300 people then have to take 10 days out of their lives (isolating), having come into contact with someone with Covid and some then can’t work after that – are they going to come back?”
With the Covid-19 situation ongoing and rules being written then revised on a regular basis, businesses are desperate for some certainty and guidance.
Sadly, the only certainty we can see at the moment is the closing window of opportunity for companies to take action to give themselves the best chance of surviving into the Autumn and beyond.
The reintroduction of wrongful trading and winding up petitions at the end of September along with increasingly aggressive recovery action from lenders for outstanding bounce back loans means businesses only have ten weeks left to put their plans into action while the conditions are still relatively benign.
As time ticks on, the rules and playing field are changing and soon it might be too late to act.
Once we get a fuller picture of your individual situation, we’ll be able to advise on the best course of action you can take to restructure and rescue your business or explore alternative options that might be more beneficial in the long run.