Businesses have warned that the UK government risks “falling at the final hurdle” after it refused to extend key coronavirus support programmes that begin to wind down at the end of the month.
Prime minister Boris Johnson’s decision to delay the final stage of ending the lockdown by a month means that many businesses — including nightclubs, music festivals and theatres — will be unable to open before late July. Pubs and restaurants will have to continue to operate with restricted capacity.
Companies face the return of significant costs from the beginning of July even if they are legally forced to remain closed. Those include the phased return of business rates, a tapering of the furlough scheme and the end of a moratorium on evictions should rent not be paid. The Treasury has made clear that it will not increase the existing support package.
Kate Nicholls, head of industry group UKHospitality, which estimated that the delay would cost the sector £3bn in sales, said that many businesses would have “reached the end of the road . . . this is [the government] falling at the final hurdle”.
The demand for partial business rates on July 1 would hit many businesses at a point when they had run out of money, she said.
Alex Proud, founder of Proud Group, which runs three cabaret venues, described the government’s decision-making as a “shitshow” that left nightclub operators facing mounting debts that they could not afford to pay. Proud had taken on £1.5m in debt during the crisis to survive — “most of us are down to the last few pennies”, he said.
Several clubs, including the 1,600-capacity Fabric in central London, had booked large opening parties for the weekend of June 26. The Night Time Industries Association said that a fifth of businesses it represented would lose about £40,000 each week of the extended lockdown. Chief executive Michael Kill said that Johnson had “switched the lights off” for an entire sector.
Sir Howard Panter, who runs the theatre company Trafalgar Entertainment, said that he faced having to abandon a production of Jersey Boys at the Trafalgar Theatre, risking job cuts among actors and staff.
“We may have to lay people off, we may have to abandon the whole show. And will the government compensate us for the millions we invested to make sure we could operate? You bet your bottom dollar they won’t.”
He added that, given the prime minister’s positive comments about the road map, many businesses had been banking on the unlocking going ahead. “How long does this go on? In four weeks’ time do we say let’s have another look and another load of businesses collapse.”
The delay also threatens the traditional British festival season. The 17,000-strong Standon Calling festival in Hertfordshire is still scheduled to feature bands from Hot Chip to Primal Scream this summer — but with an opening date now just days after the end of the latest lockdown extension founder Alex Trenchard said it would be “very tight”. He said that the main problem was the lack of any insurance to cover a sudden cancellation.
The Association of Independent Festivals said that without government action to support an insurance scheme most of the UK’s remaining 2021 festivals would be cancelled.
Michael Gove, Cabinet Office minister, said on Tuesday that the postponement was “regrettable” but argued it would be even worse to reopen and then force companies to shut in a few weeks.
Asked if the new reopening date of July 19 could be further delayed, he said: “It would require an unprecedented and remarkable alteration in the progress of the disease.”
A Treasury source said the government was “committed to helping businesses and individuals through the pandemic” and that the current support “strikes the right balance with the economy now beginning to grow as we reopen and the robustness of the labour market looking promising with less than 2m people now on furlough”.
The British Beer & Pub Association said the delay would cost pubs £100m every week given the continued imposition of social distancing restrictions.
The trade body warned of another “lost summer for pubs”, and called for a further package of support to see many struggling venues through the rest of the year.
Nick Mackenzie, chief executive of pub group Greene King, said that publicans would lose valuable trade from football fans wanting to watch the Euro 2020 tournament.
The end of the business rates holiday on June 30 would increase Greene King’s costs by £250,000 a day, he said, “at a time when we will be losing millions every day in trade due to capacity constraints”.
Major office occupiers also said they would need to rethink plans to bring people back into workplaces. KPMG said that a “four-day fortnight” hybrid working plan was due to start from June 21, but that the postponement “will be reflected in our approach, and we’ll commence with our plans when it’s deemed safe to do so”.
However, others have already decided to push back such a decision until after the summer, avoiding the need to change as the government guidance alters. EY said its offices remained open but that it expected to move to its longer-term hybrid working model from September once social distancing curbs were lifted.