Philip Smith: The hospitality industry should be grateful for the huge support it has had from the taxpayer

7 Apr

Lord Smith of Hindhead is the chief executive of the Association of Conservative Clubs.

As we emerge from the covid pandemic I think we can all agree that this has been the most extraordinary time in most of our lives, and in the life of the nation. There will be many lessons to be learned.

In addition to being a Tory Peer, my ‘day job’ as the chief executive of the Association of Conservative Clubs, the second largest members’ clubs’ organisation in the UK with around 800 clubs trading as Conservative or Constitutional Clubs across the country, I speak not just as a Tory politician, but as someone who is deeply involved in the members’ social club sector, one of the sectors that make up the hospitality industry. Like other businesses that offer food, drinks, and entertainment, we have suffered because of lockdown measures and the difficult trading conditions that resulted from local restrictions as we tried to manage the spread of covid.

I understand that in a crisis, people and businesses look to the government to wrap the arms of the state around them and protect them, as far as is possible, from the worst impacts of a national, and indeed global health crisis. And this Government has done so – to the tune of some £400 billion. I can think of no industry that has benefitted more from the largesse of the taxpayer over the past two years than the UK’s hospitality industry. So, it is with more than a little disappointment that I read the sadly predictable laments of industry commentators and leaders that the Chancellor’s spring statement didn’t leave the 12.5 per cent VAT rate in place.

Of course, everyone fights their corner and wants what is best for their business, sector, or industry. But I urge a little perspective here. I do not of course expect everyone to thank the Government for what they have done, but they could and should at least thank the taxpayer – because the funds that have been devolved upon the hospitality industry are not government money. The Government doesn’t have any money – it is taxpayers’ money. Much of the funding that has been made available is borrowed money and will have to be repaid by future taxpayers.

So, a brief summary of what our industry has received:

  • 100 per cent business rate relief from April 2020; closed business lockdown payments of between £4,000 to £9,000 from April 2021.
  • Local restrictions support grants for closed premises of between £1,334 to £3,000 per month depending on rateable value; and for premises that remained open between £934 and £2,100 per month, again, depending on rateable value.
  • The ‘Eat out to Help out’ scheme.
  • The furlough scheme which enabled hospitality premises to retain staff in return for paying just ten per cent of their wages, tapering up to 20 per cent in September 2021.
  • The ability to reclaim statutory sick pay; VAT reduced – first to five per cent, then raised to 12.5 per cent.
  • Commercial tenants protected from eviction if they couldn’t pay their rent during lockdown or restricted trading.

The support for the hospitality industry has continued throughout the pandemic – including support for businesses impacted by Omicron. On December 21st the Chancellor announced a £1 billion support package for businesses across the UK. For hospitality businesses in England, this meant one-off grants of up to £6,000 per premises, plus more than £100 million discretionary funding made available to local authorities to support other businesses. Oh, and not forgetting – the ongoing 50 per cent reduction in business rates for the next 12 months and the rise in employer NI rates announced in the spring statement.

Many businesses have more cash in the bank than they did at the start of the pandemic and net cash deposits for all hospitality businesses have risen by £7 billion (40 per cent), while small and medium-sized businesses in hospitality have seen their cash deposits rise by £2 billion (79 per cent). Fewer businesses have become insolvent, with insolvencies running 25 per cent lower than pre-pandemic levels, and staff vacancies are 50 per cent above pre-pandemic levels.

I urge our hospitality industry to accept that government cannot provide all the help that is needed to everyone, all the time. An acknowledgement however of what hospitality has received because of government decision-making would go a long way, in my opinion, to ensuring the continuity of that support. Spending decisions are political decisions, and there is little incentive for the Government to splash taxpayers’ largesse upon an industry if all it gets back is criticism that it isn’t enough and is never enough.