Labour calls for pubs and bars to be granted furlough extension

Labour has warned that many pubs and bars will be forced to close unless the government agrees to extend the furlough wage support scheme, which is due to be withdrawn next month.

Night-time hospitality businesses have struggled as punters remain cautious about heading back to their local and Labour warned that the sector would suffer a wave of closures unless it received further help.

“Pubs are a vital part of our high streets and social fabric in communities up and down the country,” said Lucy Powell, the shadow business minister. “They have been hit hard by the pandemic, and Tory indifference and incompetence over many years means that many have gone to the wall.

“Ministers’ blanket approach to ending the furlough scheme further threatens the future of many more. The furlough scheme must be extended for hard hit sectors to save jobs now.”

Labour, which reckons 5,500 pubs and bars have closed since the Conservatives came to power in 2010, is also calling for funds leftover from the government’s business grant scheme to be funnelled into a new Hospitality and High Street Fightback Fund to help ailing businesses.

Figures released last month showed that sales at pub, restaurant and bar chains halved in July compared with last summer. Trade in bars was down almost two-thirds (63%) and pubs saw a 45% slump in the first month that businesses were able to reopen after the government eased lockdown restrictions.

Last month, the British Beer and Pub Association said more than a third of pubs failed to break even in July, and a quarter of pubs and bars were uncertain their businesses would still be viable by March next year.

“With our pubs grappling with the ongoing challenge of returning to the trading levels they were at before the lockdown, hundreds of thousands of jobs hang in the balance,” said Emma McClarkin, chief executive of the BBPA. “A sector specific extension of the furlough scheme would be greatly welcomed by our sector.”

While the BBPA threw its weight behind an extension of the furlough scheme, industry figures have also identified other areas where the government could help.

Publicans have expressed bitter complaints about the financial impact of the“beer tie” arrangement that governs the relationship between large pub companies that own thousands of pub premises and the tenants who run the business.

Many publicans also expressed dismay after alcohol was excluded from the government’s six month VAT cut from 20% to 5% designed to stimulate the hospitality industry. More than 60% of the UK’s 47,000 pubs are “wet-led”, meaning they make more money from alcohol than food. Pubs are also facing huge rent bills with nearly all of the major pub companies opting to defer their demands, or offer a discounted rate, instead of cancelling payments as business has dried up during the pandemic.

Pubs, bars and restaurants also no longer enjoy the extra custom the government’s highly successful eat out to help out scheme brought in during August.

Last week, the government revealed that at least 100m meals were eaten by diners taking advantage of the scheme, which gave 50% off the price of a meal up to a maximum of £10 per head on Mondays to Wednesdays. The government has said the success of the scheme meant it would cost more than the £500m Rishi Sunak set aside in the July mini-budget.

A Treasury spokesperson said: “We have stood by pubs and the communities they serve throughout the pandemic, providing targeted support for the sector including business rates holidays and cash grants of up to £25,000.

“The coronavirus job retention scheme will have been open for eight months from start to finish – with the government helping to pay the wages of over 9.6 million jobs so far. And support doesn’t end in October with the furlough bonus paying £1,000 per employee for those brought back to work and kept in employment into 2021.”