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Research highlights flaws in level of Covid-19 government hospitality support

Published:  27 April, 2020

Research by UK Hospitality has highlighted flaws in the level of support provided to businesses during the Covid-19 crisis. 

In the research, the first comprehensive survey of the hospitality sector during the Covid-19 pandemic, businesses were asked about their experiences of accessing loans, insurance claims, the speed of grant payments and workforce issues.

Around half (48%) of businesses have applied for loans, but the majority of those receiving a response (57%) have had their bids turned down, the research revealed, with government-imposed State Aid rules accounting for over a quarter (26%) of rejections, alongside banks telling business to exhaust their own capital first (28%).

Nearly three-quarters (74%) of businesses have claimed, or intend to claim, for business interruption insurance. However, their chances of success appear limited with fewer than 1% of businesses that have claimed having received pay-outs.

Only around a quarter of eligible businesses had received hospitality grants, which falls significantly short of government estimates.  

In terms of workforce, redundancies have been kept to a minimum (2%), with the majority of businesses furloughing staff, accounting for 84% of sector employees. 

This, said UK Hospitality, demonstrated the “huge success” of the government’s job retention scheme, alongside the need for it to be extended as the recovery begins.

“These findings lay bare the extra work that needs to be done by governments, banks and landlords to make sure as many businesses as possible can survive this crisis,” said Kate Nicholls, UK Hospitality CEO.

“Hospitality was the first hit, the hardest hit and will suffer for the longest, and government support needs to reflect these facts. Hospitality businesses will be key to recovery as prolific employers, major tax contributors, and hubs for social interaction.”

Welcoming the UK governments “unprecedented support to assist hospitality through this crisis”, Nicholls pointed out that “we are in this for the long haul”.

“Everyone is rightly looking to how the economy and the industry restarts in a way that avoids a return of this horrific pandemic. Before we get to recovery, we need to make sure that the support measures already announced are getting through to business,” she said.

Loans, she added, must be fast-tracked with minimal restrictions, grants must flow to all businesses that need them regardless of size, and the job retention scheme must be amended to reflect actual earnings.

The research analysed 378 responses, covering the operators of nearly 21,000 outlets employing over 370,000 people.  

Last week, UK Hospitality warned that an extended period of social distancing could cost one million jobs unless measures to protect hospitality businesses are put in place.