Firms call for government help as Covid surges

Business groups are increasing pressure on the government to assist firms suffering from the rise in Covid cases.

The CBI urged ministers to provide support "in lockstep with future restrictions", while UK Hospitality called for business rates to be deferred and VAT discounts extended.

The spread of the Omicron variant has hit consumer confidence and seen hospitality bookings cancelled.

The Treasury insisted it had no plan to extend support beyond current measures.

However, the Treasury has acknowledged assistance through loans and grants is cheaper and faster to deploy to firms if needed. The government has ruled out a return of the furlough scheme.

The UK government and devolved administrations have not placed any additional restrictions on businesses, such as lockdowns or reduced group sizes for restaurants or bars, but many firms have seen a collapse in customers at a time when they hope to recoup lost earnings.

The hospitality industry has estimated December takings will be down by 40% - with the damage up to twice that in London.

This has prompted UK Hospitality to ask for an extension of the discounted 12.5% VAT rate to stretch beyond its scheduled end in March 2022, and for business rates due in the first quarter of next year to be deferred. The British Chambers of Commerce has also called for the Treasury to support businesses.

Celebrity chef Tom Kerridge told the BBC one of his restaurants had 654 cancellations in the past six days, during a time of year for the industry which is trying to "claw our way back to some sort of normality".

He said bar and restaurant owners "wouldn't have a problem" if they had to close from a "government and scientific point of view" because of Covid, as long as financial support was put in place.

But, he added: "It feels like there's a reactive approach to the situation rather than thinking of being proactive.

"If you're telling people to work from home, which I get and I understand, there's a knock-on effect on many businesses that are reliant on lunch trade... the coffee shop round the corner, the newsagent in the city, hairdressers and nail bars.

"There are so many different places that will be unable to cope. Getting shut down without financial support, a lot of places will close their doors and will not re-open in the new year."

Sam Morgan, who owns restaurants Craft and 8, said his businesses had seen a "rapid decline" of about 150 books per day, with more than 600 cancellations.

"We've got a perfect storm," he said. "Consumer confidence is low, meaning future bookings or bookings to replace current cancellations are low.

"Corporate customers are cancelling Christmas and New Year bookings due to nervousness around exposing customers to risk, and staff having members of their parties becoming ill, meaning they must isolate."

Mr Morgan said the situation was "extremely worrying", with revenue earned from the festive period used to cover less busy times in the first months of the year.

Meanwhile, Ratnesh Bagdai, co-founder of Brindisa and The Bailiwick Free House, said it was "frightening to see how central London has emptied" after the prime minister's speech.

"My worry is this is self-lockdown without the government support, and whilst having gone through previous lockdowns and restrictions, any further ones will be even more damaging to the sector, particularly those smaller independents," he said.

The CBI has called for an instruction from the government to tell councils to immediately release unused grants and rates relief to businesses in need.

Conservative MP Anne Marie Morris tweeted that if the government was "effectively telling people not to visit hospitality venues this Christmas", then financial support should be provided.

Baroness Ruby McGregor-Smith, president of the British Chambers of Commerce, said businesses faced a "two-punch combination of serious issues with staff absence and plummeting consumer confidence".

"Not even a rationale has been provided for why it believes no new support is required. They deserve better.

"Many of these firms, who have survived nearly two years of challenging trading conditions, are now seeing their vital festive income melt away in front of their eyes."

Rain Newton-Smith, CBI chief economist, said implementing Plan B measures was "the right thing to do", but added it had "dented" demand and consumer confidence and further support for struggling firms would be needed in future measures were brought in.

"The Omicron variant is unlikely to be the final challenge the coronavirus poses the economy or the country. So, the question is: how do we learn to live confidently not just with the virus, but with its variants?"

The Treasury has previously said that the government has "acted early" to help control the virus's spread with its booster vaccine campaign, while "avoiding damaging economic and social restrictions by allowing businesses to remain open".