NEWSFLASH: Government locks down national hospitality industry

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The government has mandated that all UK restaurants, bars and cafes should close from tonight, except for offering a takeaway service.

Prime Minister Boris Johnson has announced that all hospitality venues in the UK must close from tonight to stop the spread of coronavirus.

After several days of relative confusion, following Johnson’s recommendation on Monday not to attend sites such as restaurants, cafes, pubs and clubs but leaving them short of closure, in today’s daily briefing he detailed that he would be mandating that they shut their doors to the public.

However, he did enable foodservice venues to continue to provide a takeaway service. Johnson also reported that the government would review the situation each month to see if it can relax any of these measures.

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This move should hopefully allow many venues to be able to claim on their insurance, but for the catering equipment supply chain it comes as a blow, as the mainstay of revenue earning potential has now in effect all but dried up.

The Chancellor Rishi Sunak then announced additional measures to help businesses and employees struggling in this situation. “For the first time in our history, the government is going to step in and help to pay people’s wages. We are setting up a new coronavirus job retention scheme.

“Any employer in the country will be eligible for the scheme. Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.”

These government grants will cover up to 80% of the salary of retained workers up to a total of £2,500 a month, though employers can top up salaries further if they choose. This scheme will be backdated for wages from 1 March and will be open initially for at least 3 months, with Sunak revealing there will be “no limit on the amount of funding” for the scheme.

“HMRC are working night and day to get the scheme up and running, and we expect the first grants to be paid within weeks. We are aiming to get it done before the end of April.”

However, for those businesses in difficulties now, the Chancellor expanded the previously announced coronavirus business interruption scheme, with its interest-free period extending from 6 to 12 months. These loans should now be available from Monday (23 March).

Sunak also bolstered business cashflow support through the tax system. The government is deferring the next quarter of VAT payments so that no business will pay any VAT until the end of June. Companies will have until the end of the year to repay those bills. “That is a direct injection of over £30bn of cash to businesses, equivalent to 1% of GDP,” the Chancellor analysed.

For those who have already lost their jobs, Sunak increased the Universal Credit standard allowance for the next 12 months by £1,000 a year, and the same increase will also apply to the working tax credit basic element.

And for the self-employed, the government is suspending the minimum income floor for everyone affected by the economic impact of coronavirus. “That means that self-employed people can access in full Universal Credit at a rate equivalent to statutory sick pay for employees,” the Chancellor detailed.

“Taken together, I am announcing nearly £7bn of extra support through the welfare system to strengthen the safety net and protect people’s incomes.”

Additionally, for all the self-employed through the tax system, the next self-assessment payments will be deferred until January 2021.

Tags : businesscoronavirus
Clare Nicholls

The author Clare Nicholls

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