Hospitality warns failure to deliver Covid grants could further set back sector

UK business groups have warned that struggling hospitality and leisure companies have had to cut back staff and operations after many have been left waiting for emergency grants promised before Christmas.

In December, the chancellor pledged £683m in grants for businesses in England to help them survive the “plan B” Covid rules that stopped many people going to pubs and restaurants at the busiest time of the year for hospitality.

The government said that the grants, part of a broader £1bn package, were in recognition that “the rise of the Omicron variant means some businesses are likely to struggle over the coming weeks”.

It added: “At what is often their most profitable time of year, many pubs and restaurants have seen cancellations and reduced footfall as people have responded to the rise in cases ahead of Christmas.”

However, few businesses have yet seen any money, according to pubs and business groups, despite the need to cover rents and wages at the end of last year as they face another barren month in January.

Local councils said that the detailed guidance for the grants was only issued on 30 December and updated on 12 January. Councils have received their allocations from the government but warned that Department for Business, Energy and Industrial Strategy guidance makes it clear that checks are necessary before any money can be paid.

One local authority official said that BEIS expected the grants to have been paid out by March 31 and had set a deadline of February 28 for decisions to be taken.

Craig Beaumont, chief of external affairs at the Federation of Small Businesses, said that “only a trickle” of the grant money had begun to be distributed this week despite the strain that many businesses were facing in the new year.

“It needs to be much quicker. This is a dangerous period for those businesses as they have to pay wages and rents, and are now making decisions over staff and investment. They should not have to wait until March — when they face tax and energy hikes — to get money that was promised before Christmas.”

He said that some local authorities had told businesses they were awaiting further guidance from the government before opening up to applications.

Kate Nicholls, chief executive of UKHospitality, said that “some” grants were reaching businesses “but it is very much by exception rather than the norm”. 

Many councils were still uploading application forms to their websites and were expecting to issue grants by the end of the month, she said.

“[The grants] are a drop in the ocean compared to what they’ve lost but it’s something to get them through a really tough period when they have no cash coming in. That’s why it’s vital that local authorities get them out as quickly as possible.”

In the meantime, operators are “muddling through and surviving” by tapping banks on the promise of receiving grants later in January but already some had started to cut staff hours or had closed to save costs, Nicholls added. UKHospitality estimates that a third of all hospitality businesses had less than one month’s cash reserves.

BEIS said the government had delivered the money on January 7 along with guidance on eligibility.

“It is absolutely essential councils pay out as quickly as possible,” they said. “We encourage relevant businesses to contact their local council to apply, and we continue to urge local authorities to ensure this much-needed funding gets to businesses that need it, relieving some pressure on their cash flow.”

Shaun Davies, leader of Telford and Wrekin Council and chair of the Local Government Association’s Resources Board, said that “grants have been a vital lifeline to businesses and councils will work hard to get any new government funding out to businesses”. 

Despite this, business owners across the hospitality industry have pointed out that the grants, which are capped at £6,000 per site, will do little to replace the trade lost over the Christmas period.

Stacey Sherwood-French, co-owner of Joro, a restaurant in Sheffield, said the aid was “appreciated” but “for a lot of companies there have been significant losses across the board from December trade, heading into January with uncertainty and empty bank accounts the industry needs to see extended long-term assistance”.

Tim Foster, co-founder of Yummy Pubs, said he had not heard back yet after applying for a grant. But, he added, that for one of the worst-affected sites, the money “doesn’t even cover one days trade in December”.


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