£1 billion extra support for hospitality to cope with Omicron

The Chancellor has announced extra support for businesses impacted by the Omicron variant of COVID-19.  With further details of grant funding published on 7 January 2022.

Following talks with industry sector leaders, Rishi Sunak has announced:

• Businesses in the hospitality and leisure sectors in England will be eligible for one-off grants of up to £6,000 per premises, plus more than £100 million discretionary funding via local authorities to support other businesses
• The Treasury will also underwrite the cost of Statutory Sick Pay for Covid-related absences for small and medium-sized employers across the UK
• £30 million further funding will be made available through the Culture Recovery Fund, enabling more cultural organisations in England to apply for support during the winter
• Extra funding will be given to the devolved administrations.

The Omicron variant and the government's response has resulted in many people and firms cancelling their Christmas plans, having a direct impact on pubs and restaurants. Many have reported losing as much as 60% of their business over the festive period.

As a result, the Treasury says that around 200,000 businesses will be able to apply for grants which will be administered via local authorities and will be available in the coming weeks.

The government is also providing grants equivalent to the monthly cash awards made to hospitality businesses during lockdown earlier in the year, even though businesses are still able to trade.

Additional Restrictions Grant

The government is giving £100 million to the Additional Restrictions Grant (ARG) fund for local authorities in England. They will have discretion as to how they allocate this funding to businesses most in need.

The ARG extra funding will be prioritised for those local authorities that have already distributed most of their existing allocation. This is on top of the £250 million of previously allocated funding that remains with local authorities.

You can find your local authority via the GOV.UK website.

Statutory Sick Pay

As increasing numbers of Covid-19 cases means more workers taking time off work, the government is also reintroducing the Statutory Sick Pay Rebate Scheme (SSPRS).

The SSPRS will help small and medium-sized employers – those with fewer than 250 employees – by reimbursing them for the cost of Statutory Sick Pay for Covid-related absences, for up to 2 weeks per employee. Firms will be eligible for the scheme from 21 December 2021 and they will be able to make claims retrospectively from mid-January.

This comes after the recent announcement that between 10 December 2021 and 26 January 2022 employers cannot request from workers proof of sickness until an absence has lasted for 28 days or more. And SSP cannot be withheld due to late medical evidence. However, employers can still ask for proof of a positive COVID-19 test. (See the regulations)

Culture Recovery Fund

To provide continued support to the cultural sector, £30 million further funding will be made available through the Culture Recovery Fund to support organisations such as theatres, orchestras and museums through the winter to March 2022.

This figure will build on nearly £240 million of cultural grant support already allocated this financial year or currently available for organisations to bid for.

Over the course of the pandemic the UK Government has provided nearly £2 billion in support to the cultural sector, with the original £1.57 billion round of the Culture Recovery Fund announced in July 2020.

Rishi Sunak explains the new measures in a Twitter video.

Existing and ongoing COVID-19 support

This new funding builds on the existing package of business support, including:

• business rates relief resulting in the majority of businesses in the hospitality and leisure sectors seeing a 75% reduction in their business rates bill across the entire financial year and a new 50% capped business rates relief next financial year;
• a 12.5% reduced rate of VAT for hospitality and tourism to support the cash flow and viability of around 150,000 businesses and protect over 2.4 million jobs, until the end of March 2022;
• the £1.5 billion Covid Additional Relief Fund for businesses that have not previously had business rates support;
• businesses will be protected from eviction if they are behind on rent on their premises, thanks to the moratorium in place until March 2022;
• access to finance for SMEs through the Recovery Loan Scheme to June 2022; and
• Bounce Back Loan repayment flexibility, with borrowers having the option to take a 6 month repayment holiday, three 6 month interest only periods or extend their loan to 10 years, which almost halves the monthly payment.
• support for the aviation and travel sectors, including over £12 billion since the beginning of the pandemic, and the Airport and Ground Operations Support Scheme (AGOSS) until the end of March 2022.
• HMRC says it stands ready to support any business impacted by the pandemic through its Time to Pay arrangement, and the Chancellor has asked them to offer businesses in the hospitality and leisure sectors in particular the option of a short delay, and payment in instalments, on a case by case basis, as part of this.

More details are included in published factsheets.

Analysis

This new money is a drop in the ocean compared to the £407bn already projected to have been spent on COVID-19 support. The extra funding is not because of new lockdown measures, but because the government has created so much uncertainty in the public's mind about safety and whether new restrictions will be announced at short notice.

The best support for the hospitality sector is consumerism, but that support is reduced or even absent entirely where there is a lack of clarity from the government on what the public can and cannot do. We still expect to hear the government announce new restrictions after Christmas Day.

As regards the amount of new money announced, a £6,000 grant for a large restaurant is not going to help very much when the costs of remaining open are considered (particularly in the absence of furlough). It is a token, albeit a welcome one. Many businesses will not get the full £6,000 as the grant is based on business rates.

Notably, there is no help for the travel industry which has also felt the impact of Omicron and the government's so-called Plan B restrictions. The sector will see it as unfair that it has been ignored.

More positively, we look forward to hearing from the Chancellor on how he plans to help the economy recover from the pandemic in the longer term.

During 2020 and 2021 the Chancellor made a series of adjustments to business support. We only recently had the Autumn Budget, but with the ongoing uncertainty it is more than likely that we will not have to wait until the next Autumn Budget before Rishi Sunak makes further announcements.

Further help

Check if you're eligible for the Omicron Hospitality and Leisure Grant

More information and guidance can be found in our Business after Covid Transition Knowledge Hub.

If you would like to discuss how you can access this new funding or you would like help with your business finances, please contact a member of our Corporate Finance Team or our Restructuring Team

If you require help with Statutory Sick Pay, please contact our Payroll Services Team.

Otherwise, please contact your usual Bishop Fleming advisor.

[Gary Mackley-Smith]