The United Kingdom’s economy has taken a substantial hit because of the coronavirus outbreak, with many businesses facing insolvency, and redundancies at an all-time high. The pandemic has claimed the lives of over 45,000 people in the country, while millions more are dealing with the consequences of months-long lockdown.
The hospitality sector is vital to the UK economy, with jobs in this industry making up 9% of the total UK employment. The entire industry had to shut down due to lockdown restrictions, and household names like Carluccio’s, Chiquito, and Pizza Express have either gone into administration or closed stores permanently.
The Office for National Statistics revealed that 8 in 10 tourism and food industry workers were furloughed because of coronavirus. Furloughed workers receive 80% of their average monthly salary, paid for by the government, while they are unable to work. This is costing the government approximately £14biliion every month, and it is likely to continue until October.
Sales within the industry are expected to see a 50% reduction over the summer, equating a total loss of £73billion across the country. Hence the government is prioritising financial support for this sector, or risk seeing even more workers become redundant.
The new “Eat Out to Help Out” scheme is another way in which the government is supporting the hospitality sector by trying to create a surge of diners and drinkers for the month of August. Chancellor Rishi Sunak announced the new initiative in his Summer Statement at the beginning of July 2020. More than 50,000 hospitality venues have signed up to the scheme, which will allow restaurant guests at venues all over the country to enjoy their meals for half the price they would normally pay. Venues that have signed up to the programme will be expected to reduce any food items and non-alcoholic drinks by 50% on the final bill. Businesses can claim the money back, with funds in their bank account within five working days.
Director of Tiger Bites Pig, Ed Shawcross, told Eat News, “We’re using the Eat Out to Help Out initiative as a way of re-launching the eat-in element of our restaurant. Since the beginning of lockdown, we’ve only been doing takeaway and collection, so this is giving us the needed to boost to be able to open up properly with a smaller risk to business. We are already fully booked for the days included in the offer for the first three weeks of August and have even added in an extra time slot than planned in response to demand.”
Events Manager at Gusto Italian, Ash Hulme, told Eat News, “We’re currently running with reduced staff and have only been able to open eight of our restaurants, with a considerable drop in capacity. So, the more revenue we can bring in with the help of the scheme, the sooner we can increase hours for the staff and reopen more of the restaurants.”
For those who are not participating in the scheme, now legislation has been introduced which will now allow pubs, bars, cafes, and restaurants across the UK to set up outdoors to increase their trade. The government are also cutting the VAT on food, accommodation, and attractions for the next six months from 20% to 5% for the sector, which is designed to protect 2.4 million jobs. This VAT relief will apply to a great number of businesses across the hospitality sector.
It is expected that by providing an incentive for the public to venture out, they will begin putting money back into the economy and ensuring that the United Kingdom is ready for a potentially very unstable Christmas period.
As the country eases out of lockdown, the government has also introduced a jobs retention bonus, which rewards employers who bring back workers from furlough, with a grant of £1,000 per employee. Approximately nine million people were furloughed from their employment at the beginning of lockdown, and the UK is striving to provide businesses with incentives to keep these workers employed for as long as possible. Rishi Sunak also announced that employers will be paid to take on under-24s during this time, since this is the worst affected demographic. The plans dubbed “the mini-Budget” will cost the UK government approximately £30billion.
The UK has also introduced new legislation to protect the consumer during the pandemic. Under the current rules, if a company becomes insolvent, goods paid for in advance that are still in its possession may be considered as assets belonging to the business. These goods can then be held by the company’s administrators and used to pay off the firm’s debts, potentially leaving consumers out of pocket.
Consumer Affairs Minister, Paul Scully, has asked the Law Commission to consult on draft legislation to update the law that establishes when consumers legally own goods for which they have pre-paid.
Scully, said, “With more and more people prepaying for goods online, it is so important our laws are up to date to reduce the risk of customers losing out if a business unfortunately becomes insolvent. This consultation will look at how the law can be brought into the 21st century, providing clarity for those managing insolvencies and better protection for consumers.”
The proposals would also support those shopping online. In 2020, around 20% of all retail sales take place online and require prepayment. The last few months have seen internet sales jump from 19.9% of all retail sales in January 2020 to 32.8% in May 2020.
The changes would build on the recent Corporate Insolvency and Governance Bill, which made permanent additions to the UK insolvency regime, as well as containing a series of measures to amend insolvency and company law to support business to address the challenges resulting from the impact of coronavirus.
The “Eat Out to Help Out” scheme was launched today (3rd August 2020) and the results are expected to be seen by the end of the month.
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