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Greater urgency and clarity on business and on-trade support needed immediately

Published:  19 March, 2020

As the on-trade shuts down, suppliers and hospitality operators are continuing to press government and banks on the speed with which relief measures are needed by the trade.

Details of the Chancellor’s New Business Interruption Loan Scheme and Bank of England-backed low cost loan initiative, along with cash grant access for the smallest businesses, are set to go live – if all goes to plan – on Monday, but much uncertainty remains, along with the ease of claiming, speed of access to relief funds, and deferral of PAYE and VAT.

The ‘cashflow pinch’ is already hitting, and hitting hard, with restaurants, bars and pubs closed down, staff shed and the effects already rippling up the supply chain.

In addition, while many on-trade operators are taking advantage of new government policy allowing them to offer food deliveries, for those that currently don’t have an off-trade licence, no delivery of alcohol is allowed.

Suppliers are also calling for a temporary suspension of this regulation to help both restaurants and their suppliers.

“The support from government is very welcome indeed. Of even greater importance, however, is the ease of access to the support that has been promised,” said David Gleave MW, MD of Liberty Wines.

He adds that many businesses, “simply won’t survive unless they reduce outgoings to the same level as income – zero”.

“The bigger companies have access to the expertise required to navigate the bureaucracy that tends to accompany much support, but the smaller players don’t. They need help and they need it now.”

Fergal Tynan, MD at Alliance Wine, similarly questioned whether support would come too late for many.

“The theory is OK, but so far the government does not seem to have grasped the practicalities – showing very poor understanding of the reality on the ground, which is catching up on businesses way faster than the government’s response is allowing for,” said Tynan.

“Banks have no details of how the support will work - at least that’s the message from those at the coalface - this needs clear and immediate central government action, there is not time for thousands of individual conversations – VAT, PAYE and duty need to be put on hold to give companies time to plan and engage with banks.”

Tynan also stressed that millions employed in the hospitality and on-trade sectors have nothing immediate in place to protect jobs.

“Many are already gone, more will go today and everyday until the right scheme is announced, which needs to be in place by the end of this week or many more will go before payrolls are issued next week for month end.”

With cash drying up completely in the on-trade, he adds, “the pressure will get pushed all the way up the chain by the end of the month when the true scale will become apparent”.

Andrew Bewes, Hallgarten & Novum Wines’ MD, agreed that “it’s all about cash”, speaking of the difficulty of balancing the need to support customers, helping them find a way through this crisis, while securing payment to protect the livelihood of his own employees.

“To a large extent we and our customers are in the same boat as we try to find a way through this situation [and] providing banks are quick to respond, arrange loans and provide grants for these businesses, we could see huge numbers of on-trade businesses saved, suppliers paid and their team members retaining their jobs. However, more is needed,” he added.

Saying that Hallgarten is fortunate to enter this period in strong financial health, he added: “For us to remain in a viable position we will have to ensure that our exposure to debtors is not increased and this will put additional pressure on our customers.”

As with other suppliers, the company is working closely with its customers to ensure that they will take advantage of government-secured loans (as they become accessible) to pay staff and suppliers in the short term, while lobbying HMRC for a break in VAT and Duty payments.

“We are all in this together, and we will do our utmost to go above and beyond to help our partners come through this crisis,” said Bewes, summing up the collaborative and fighting spirit that has emerged across the trade.