For some working in hospitality, one of the industries hardest hit by lockdown, Rishi Sunak’s wage subsidy scheme comes as a huge relief. Alex Clayton, owner of Tasca Dali Spanish restaurant in Warwick, believes it will prevent his business from permanently closing, and keep his staff in employment. “I welcome all his measures," Clayton says, "and consider them insightful, strategic and inspired.”
The new scheme aims to support “viable” jobs by enabling the Government to top up the wages of employees who can work at least one third of their usual hours. This will guarantee those on the scheme at least 77 per cent of their usual working wage, with actual working hours being paid for by the employer, and the remainder split between the Government and the employer.
It is due to commence in November and is expected to pay out £5bn over six months, aimed specifically at “firms that need it the most”, meaning small and medium enterprises rather than larger businesses.
Chef Richard Bainbridge of Benedicts in Norwich agrees that it will help to keep his long-standing employees in work. “We have a number of valued, long-standing employees who have not been able to work the same hours due to the loss of covers. Now, regardless of the new curfew, we will be able to keep them,” he says.
For a great many others, however, the scheme lacks the clarity needed to provide reassurance. “We’re glad the Chancellor has listened to calls for action,” says Nik Antona, national chairman of CAMRA. “However, those jobs will cease to exist if pubs and breweries are not “viable businesses.”
There is concern about who exactly will benefit most from the scheme; Jonathan Downey, owner of Milk and Honey bar in London and founder of Hospitality Union, believes that contrary to Sunak's assurances, the scheme will benefit big business only. “900,000 hospitality workers are on furlough right now because their jobs don't exist – their employers can’t open, perhaps because they are too small, perhaps because the majority of their trade happens at night," Downey says. "Sunak has essentially just written them off. By supporting people already in work, he’s supporting big business again.”
A recent survey by funding expert GovGrant reveals that only 15 per cent of SMEs (small and medium-sized enterprises) believe the Government is doing enough to create a strong economic environment. “I was expecting very little, and we got even less," Downey continues. "Our industry was just getting back on its knees. The curfew is a shot to the stomach, and Sunak thinks he can solve it with a cup of tea and biscuits. It’s simply not enough.”
Downey adds that rent, which wasn't addressed in the Chancellor's announcement, is “the most important thing. There's a massive amount of rent debt piled up, and landlords aren't giving in.” Piers Baker, owner of The Sun Inn in Dedham and Church Street Tavern in Colchester, agrees. “I settled a rent issue with my landlord that was based on there being no curfew. They won't be to keen to talk again.”
The temporary VAT reduction from 20 per cent to 5 in the hospitality industry has been extended until the end of March 2021, and Sunak believes the extension will “support more than 150,000 businesses” through the winter period. But pub and restaurant owners disagree. “A VAT cut won’t be effective considering the reduction in sales we’ll experience due to the 10pm curfew,” Baker says. “And with fewer customers, reduced hours and less turnover, I don’t see how we’ll be able to afford to keep the number of staff we have, even if the Government is topping up their wages.”
David Moore, owner of Michelin-star restaurant Pied à Terre in London, says the extension is "welcome" but doesn’t go far enough. "With all the challenges we face, this would be a good time for a seismic shift on business rates to focus on sales tax.”
Many business are fearful that, as they prepare to enter a festive period like no other, keeping employees on their payroll may simply be impossible. “I worry about putting my employees on this scheme," admits Paul Charalambous, the founder of Cail Bruich in Glasgow, "that I may not be able to afford in three or four months time.”