Lockdown: Thousands of jobs at risk if shops and pubs cannot reopen after lockdown, MPs warned

Hospitality sector in ‘intensive care’ as businesses burn through billions

People pass a row of shops in the Sparkbrook area of Birmingham, central England, on August 15, 2018. (AFP via Getty)

Thousands of jobs and businesses are at risk if coronavirus restrictions are not eased to allow shops, pubs and restaurants to open when the current lockdown in England ends on 2 December, MPs have been warned.

British Retail Consortium chief executive Helen Dickinson said retailers are losing £2bn in sales every week of lockdown and were depending on being able to open their doors for the crucial pre-Christmas season, while UK Hospitality boss Kate Nicholls said the sector was “in intensive care”.

Their comments came after a senior Public Health England official warned that regional restrictions coming into force when lockdown rules expire next month will have to be tougher than those introduced by Boris Johnson in October. The tier 1 restrictions devised by Mr Johnson for the bulk of England - which included a 10pm curfew on hospitality venues and a “rule of six” limit on social gatherings - had “very little” impact on the spread of coronavirus, said Dr Susan Hopkins.

Speaking to the House of Commons Business Committee, Ms Dickinson said that the economic impact of closing non-essential shops during the second lockdown had been “severe”.

“Many retail businesses’ survival is now being threatened because of the timing of this second lockdown,” she said.

“It's the most crucial trading period of the year, the run-up to Christmas. We estimate that store sales of about £2bn per week will be lost during the month of the English lockdown. Online and logistics is already close to capacity so it won't be able to take up much of the slack in the same way that it has done throughout the rest of the year.”

Up to the end of September, some 13,800 stores had closed during the pandemic and vacancy rates were up from 13 to 14 per cent, with the worst rates in the northeast, she told MPs.

“Every store that closes is between one and 100 job losses,” said Ms Dickinson.

And she said those shops which have hung on are now depending on being able to reopen their doors on 3 December, and the knock-on consequences for the sector will be severe if ministers do not allow this to happen.

“It's certainly the planning assumption of every retailer that they are able to reopen on the 3rd,” Ms Dickinson told the cross-party committee. “So the most important thing at this point is that we have real clarity that reopening will occur as planned.”

She said concerns for future viability affected every retailer from small independents to large chains, with clothing and footwear worst-hit. She cited one business which had seen turnover fall from £200m to £160m and another which told her that 4,000 jobs were at risk if they cannot reopen on 3 December.

Many were aggrieved that they had been forced to close during November due to an “arbitrary” distinction drawn between essential and non-essential retail, and despite the prime minister’s Scientific Advisory Group on Emergencies finding that shopping was not a significant risk for spreading Covid-19, she said.

“It’s more hard felt because of the timing, because of that crucial final month of December, given that the Sage evidence has shown that that retail itself is is a safe environment and the businesses have invested so much again whether they're big or small in ensuring the safety of their colleagues and their customers.”

Ms Nicholls told the hearing that hospitality businesses “never really came out of restrictions” following the first lockdown in the spring, with revenues down by 75 per cent by July and still 15 per cent below normal at the end of August, following chancellor Rishi Sunak’s Eat Out to Help Out scheme.

“Our businesses going into this second national lockdown are in a far less resilient place than they were in the first lockdown,” she warned. “They've got depleted cash reserves. They are going through a terrific amount of cash burn while they are closed.

“We estimate that that's about a half a billion pounds of cash burn that the businesses are going through, just to remain closed in November.”

Ahead of the pandemic, hospitality was the UK’s third largest employer with 3.2 million workers and £130bn in turnover and was forecast to grow 5 per cent year on year and generate one in six of net new jobs, she told MPs.

Instead, by the start of the second lockdown, employment numbers were down 20 per cent, with 660,000 jobs lost and turnover down 40 per cent to £80 billion.

The period from Halloween to New Year’s Eve would normally be the sector’s “golden quarter”, accounting for 40 per cent of annual revenues, while December alone delivered 20 per cent of profits, said Ms Nicholls.

“Hospitality has gone from a pretty precarious position at the end of Q3 (the third quarter of 2020) back into intensive care in Q4 as we come through this,” she said.

“That's why the national lockdown second time round is going to be much more significant for our businesses.

“It's imperative that it is time-limited that we have an ability for as much of the economy and as much of the sector to open with as few restrictions as are necessary to protect public health, to allow these businesses to gain some income during December.”