While Bath’s hard-hit hospitality industry digests the measures announced by Chancellor Rishi Sunak to help the sector in his summer economic statement, two experts from the area have questioned whether they go far enough.
Richard Lake, an associate in the leisure & hospitality team at Bath-headquartered law firm Royds Withy King, fears many of the independent restaurants and cafes that give the city its unique eating-out offering will run out of cash to keep them going until the scheme kicks in next month.
And Phil Mills, head of food and drink at accountants Old Mill, which has offices in Melksham, Wells, Yeovil and Exeter, is concerned the short-term measures could cause more problems than they solve when what is needed are sustained initiatives.
Richard Lake, pictured right, said: “Whilst the larger chains will be well placed to prepare and market themselves over the next three weeks, independent restaurants may not – and it is those independents that play a pivotal role in our local communities.
“Independents may be able to pivot more quickly in terms of their offering, but the three-week lead time for this scheme will play into the hands of better resourced chains. The question is how many will survive the next three weeks to take advantage of diners’ and government’s hospitality.”
He said the headline-grabbing ‘Eat Out To help Out’ campaign for August – supported by the cut in the rate of VAT from 20% to 5% on dining and accommodation – would only be successful if the public could be persuaded that they are safe and they are getting value for money – and there was no guarantee that the reduction in VAT will be passed on to customers.
“The potential for reputational damage will probably deter most business owners from taking advantage of the tax break, however these are challenging times and business owners might be tempted to keep as much of the benefit themselves to cover increased costs without passing it onto their customers,” he said.
“There is also a question as to how taxes are added to individual items. Customers may expect to see their whole bill lower following the cut in VAT and Eat Out To help Out, but that is not necessarily the case – alcoholic drinks are, for example, excluded. We may see more squabbles over the bill at the end of the evening.”
Phil Mills, pictured right, said the VAT cut would make a huge difference to pubs and restaurants trying to get back on their feet, along with the discount dining campaign and the scheme to give businesses £1,000 for each staff member taken off furlough and back into work.
“And while any initiatives put in place to help the region’s struggling pubs and restaurants are certainly welcome, I think these two may have some issues,” he added.
“Pubs and restaurants are usually pretty busy in August and with most people likely to opt for a staycation this year, I am not sure pushing demand over the summer holidays is what’s needed.
“There is a danger that participating pubs and restaurants will see a huge spike in custom for a month which could mask the real state of the business, causing them to take back staff – encouraged by the £1,000 incentive – who they then cannot afford to keep once the discount is finished.
“What the sector really needs is more sustained initiatives that drive demand, not just in August, but throughout the rest of the year, allowing businesses to find their feet without being lulled into a false sense of security by short-term measures.
“What we don’t want to see is businesses taking on staff to cover a busy August, and then have to let them go when they realise that their model is not sustainable, causing further issues for an industry already struggling to know what the new normal looks like.”
