‘Insulting’: Rishi Sunak’s £1bn funding package dismissed as ‘nowhere near enough’ to save struggling firms

Hospitality firms to receive grants of £6,000 per premises but industry leaders brand the chancellor’s offer ‘offensive’ and a ‘drop in the ocean’ compared to what’s needed

Ben Chapman,Rob Merrick
Wednesday 22 December 2021 12:45
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Rishi Sunak unveils £1bn of new funding for firms hit by Omicron wave

Struggling hospitality and leisure businesses hit by a wave of cancellations as Covid case numbers surge are to receive cash grants from government as part of a £1bn emergency funding package – but industry bosses attacked the deal on Tuesday, warning it fell far short of what is needed.

After desperate pleas from firms who have seen trade plummet this month, Boris Johnson and Rishi Sunak unveiled new measures to help them survive a punishing Christmas and New Year period.

However, some industry leaders labelled the offer “offensive”, “insulting” and “nowhere near enough” on Tuesday.

Mr Johnson confirmed there would be no new Covid rules in England before Christmas but did not rule out more measures after that. Businesses in Scotland face further restrictions from Boxing Day after ministers tightened up rules on large events.

Rishi Sunak announced funding for one-off grants of up to £6,000 per premises for pubs, restaurants, clubs and other leisure businesses in England. More than £100m in additional discretionary funding has been made available for local authorities to support other businesses. While £154m will be made available to Scotland, Wales and Northern Ireland.

Around 200,000 businesses will be eligible for the grants which will be administered by local authorities and will be available “in the coming weeks”, the Treasury said. Previous rounds of grants have been subject to delays, with the speed of delivery varying markedly across different parts of the country.

In Scotland, crowds at outdoor public events will be capped at 500 from Boxing Day for at least three weeks while indoor events are to be limited to 100 standing or 200 seated.

As part of the UK government’s support package, employers with fewer than 250 staff can apply to be reimbursed for the cost of statutory sick pay for Covid-related absences, for up to two weeks per employee. Firms will be eligible for the scheme from today and they will be able to make claims retrospectively from mid-January.

A further £30m 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.

Some industry leaders questioned whether it would be enough and warned that more businesses would fail after seeing sales plunge during what would normally be the busiest period of the year.

“This package is a disgrace and offensive,” said Sacha Lord, Greater Manchester’s night-time economy adviser.

“The chancellor has been sitting on this plan for days now, and it is nowhere near enough to save the industry. Now the help has been outlined, it is simply not enough. How can businesses that expected to take up to 30 per cent of their annual revenues during December survive on £6,000 grants?

“Businesses are going to close. Irreversible damage has already been done and unless the package is immediately revised to provide adequate support, we are going to see more businesses close their doors for good. We cannot afford for the government to turn their backs on us again.”

James Withers of trade body Scotland Food and Drink said the funding was a “drop in the ocean” compared to the financial damage businesses are facing.

Mark Davyd, founder and chief executive of Music Venue Trust, said £30m for cultural institution “seems detached from the reality”. He added: "If correct, it would be inadequate to deal with the scale of the problem.”

Kate Nicholls, chief executive of UK Hospitality was more positive, welcoming the “generous” package.

She said: “It will help to secure jobs and business viability in the short term, particularly among small businesses in the sector, and we particularly welcome the boost to funds for the supply chain and event and business catering companies so badly affected by the reintroduction of work from home guidelines.”

Hospitality businesses have warned that they faced a “lockdown in all but name” thanks to increasingly pessimistic government messaging about the threat of the Omicron variant.

While they are allowed to remain open, hospitality businesses report trade in December is down between 40 and 60 per cent.

Scientists fear that record case numbers this week will soon result in a sharp rise in hospitalisations, overwhelming the already overstretched NHS at its busiest time of year.

The Trades Union Congress (TUC) called for a new targeted furlough scheme as ministers consider bringing in new restrictions.

“Already this lockdown by stealth is closing pubs, restaurants and arts – and risking jobs and livelihoods,” said TUC general secretary Frances O’Grady. “Every day we are hearing from workers whose shifts are cancelled and even some workers who are being sent home without pay.

“Workers need help now to pay their bills. Any new restrictions that reduce demand or force businesses to shut must come with help to pay wages.”

Announcing the new measures, Boris Johnson said: “With the surge in Omicron cases, people are rightly exercising more caution as they go about their lives, which is impacting our hospitality, leisure and cultural sectors at what is typically the busiest time of the year.”

The prime minister and chancellor both urged people who have not already done so to get their booster vaccination.

Rishi Sunak said: “We recognise that the spread of the Omicron variant means businesses in the hospitality and leisure sectors are facing huge uncertainty, at a crucial time.

“So we’re stepping in with £1bn of support, including a new grant scheme, the reintroduction of the statutory sick pay rebate scheme and further funding released through the Culture Recovery Fund.”

Later in the day, Mr Johnson sought to lift the cloud of confusion over whether tougher Covid restrictions are on the way in England.

In a video message, Mr Johnson said that there was not yet “enough evidence” about the hospitalisation rate or the impact of the vaccine rollout or the boosters to justify any tougher measures at this stage.

The prime minister added: “We continue to monitor Omicron very closely and if the situation deteriorates we will be ready to take action if needed.

The cabinet shelved a decision on Monday – and is now awaiting fresh data on the extent to which soaring Omicron infections will trip over into a level of hospital admissions that will swamp the NHS.

That data, from Professor Neil Ferguson and his team at Imperial College, is expected in the next 36 hours, possibly triggering a recall of parliament next week to approve curbs before the New Year.

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