Lunya

17/12/2021

Lunya’s plea to the government for COVID financial support in light of their announcements on Omicron

Dear Chancellor, if a business’ trade is impacted as a consequence of government policy announcements (directly or indirectly), then it should be duty bound to financially support business to survive the impact of it.  Here’s why we think why:

From just one small, family owned business, with two restaurants, we have proudly paid over £8M in taxes in the 11+ years we have been open.  That is just us; imagine what the figure must be for the hospitality industry as a whole, it will run into tens of billions.  The country needs all of us to survive to carry on paying these taxes (and more) to financially recover from the pandemic and to start to pay the borrowing down, although we think @richardjmurphy has a good take on this

December, for most in the hospitality sector, accounts for between 20-30% of your total year’s income. Any impact in December has a hugely damaging effect. We rely on a huge take in December to get us over the very poor months of January and February (and even March). This December, it looks like our income will be down by about £150,000 – £170,000, with cancellations and the huge reduction in bookings since the government announcements.

Luckily for us, we are more than just a restaurant, and thanks to the incredible support from our customers for our deli, online store and online events, this will not finish us off (but without these extra activities, it would); but it may do for many other restaurants and bars. With many hugely indebted, perilously low levels of reserves and poor balance sheets, many will not survive. And even for us, we were planning to pay one of our CBIL loans back this month (one of the ones you have underwritten), it would have taken that risk off the government’s balance sheet.  We can’t do that now and now go in to 2022 with over half a million pounds of government backed debt. so, even a strong business like us is left teetering, if the impact lasts into 2022, we will be in serious trouble

Add into this landlord rent debt for many still unresolved (thankfully not for us, our landlords have been brilliantly supportive), rate relief disappearing in April, VAT going back up to 20% in April, with no financial support, it will be the final straw (for most of us, VAT reduction has enabled us to survive the enormous increases in fuel, food, drink and other costs – but it has just deferred the pain of that until the VAT reduction disappears)

So, we find ourselves back in March 2020 with the government saying lots of ‘shoulds’, offering no support to the hospitality industry (the VAT at 12.5% and the business rate relief continuing to March 2022 are not support for this impact, they are legacy support to get over the dreadful financial impact of COVID in 2020 and the first half of this year; plus and this is very important to understand, as revenue drops, the benefit of the VAT cut is undone).  These have virtually the same impact as full lockdown closure.  It is morally wrong and economically illiterate to let restaurants and bars go bust. If you have survived to this point, you are a strong, underlying, successful business – the government needs us.

Plenty of problems, let us suggest some solutions:

  1. Reintroduce flexible furlough for the hospitality (and other allied sectors) that have been impacted by your announcements
  2. Provide an emergency grant (much the same as spring 2020, but do not have an arbitrary rateable value cut-off point; lots of small businesses like us did not qualify as a result)
  3. Pledge now to extend the Vat reduction and business rate rebate for the remainder of 2022, at least, so we can plan
  4. Introduce a 6 month moratorium on CBIL and bounce-back loans
  5. As a sector, we will be here to pay the taxes that you and the country will need; we will keep millions in employment and be here for decades to come brining badly needed enjoyment to the country
  6. Lastly, if a business has been able to pay dividends to its investors, it either doesn’t need this help or morally shouldn’t get it, their investors can bail them out
  7. And very finally, if none of this is palatable, why not give every hospitality business an inflated PPE contract, it seemed to work for a lot of ministers’ mates 😉

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