Ahead of Chancellor Rishi Sunak’s 2021 Budget, to be delivered on 3 March, Catering Insight consulted a range of UK catering equipment distributors on what they would be looking for from the announcement.
When asked what new financial measures he would like to see from the government, David Burnett, director of Fulcrum Commercial Kitchens said: “Additional measures from Rishi Sunak all really need to assist with cash flow as we begin to pull out of the hospitality lockdown.
“We all need breathing space to recapitalise following the nightmare year that most have suffered. Measures such as further deferring VAT, Corporation Tax and even employers’ contributions would help. But their ultimate repayment may need to be staged too as debts rise.”
While KCCJ MD Kevin Slatter believes: “Ultimately our industry needs customers so beating/controlling the virus is the only real answer. Rishi Sunak will need to balance the books so any short term gains he may give now will end up as long term pain.”
And on the same question, Eileen Say, MD of Eileen Say Catering Equipment, underlined: “We are concerned about the impact of reverse charge VAT on our industry, which seems very poorly timed, so that should be delayed or even shelved completely.”
On the subject of whether the furlough scheme, currently due to conclude at the end of April, should be extended, she said: “This needs to run for as long as the hospitality industry is effectively closed, and perhaps beyond, until businesses have been able to sufficiently recover.”
KCCJ’s Slatter had similar thoughts, commenting: “I believe the furlough scheme will need to be phased out over a period of time and at least not until the new norm is established.”
Fulcrum’s Burnett agreed: “Continuing furlough a little longer would of course help financially as well as allowing companies to protect good members of staff which they are not quite ready to bring back. This will especially help bigger distributor operations with wider teams.
“Of course it has to have a reasonable end date to stop abuse and, regrettably, weed out the weaker businesses who have relied on furlough whilst making no effort to re-structure and help themselves.”
However, he noted: “It doesn’t affect us as we have already necessarily needed to make significant changes in staffing towards the end of 2020 – so we are at a strong ‘baseline’ with no-one available to furlough. I would guess this is the case with many other SMEs.”
On whether more government loans should be available to the catering equipment supply chain, Burnett said: “I don’t think loans particularly help, as they need to be paid back and therefore put immediate pressure on any attempts to recapitalise.
“The business that is undoubtedly out there is tough to gain and it’s no surprise that margins are being squeezed. Some end users genuinely have little capital left but others are driving down selling prices knowing that they have a strong buying position in the current climate. Grants would always be useful, however small.
“The debt caused by Covid and Brexit is so high now that it appears on one hand to be irresponsible to ask for further ‘free money’ – on the other hand a few million added to the debt seems like loose change. They need to widen the net of what is classified as an ‘affected business’ though.”
KCCJ’s Slatter believes for the loan question: “A level of realism is needed here, given that many companies within our industry work on such tiny margins and hold very limited reserves, they may never be able to repay the loans they already have. In addition and unfortunately, the impact of the virus will change things for many years to come and realistically the leisure industry may never be the same again with the loss of many jobs.”
While Say said of the government’s existing schemes: “The support so far has been accessible and welcome.”