Ministers rule out further business support under new Covid restrictions

The government has ruled out new financial support for companies, including hospitality and retail businesses that face losing crucial sales over the Christmas period, despite introducing fresh coronavirus restrictions.

Business lobby groups have called for extra state help to cover losses expected to result from Boris Johnson’s new Covid-19 measures for England, which include guidance for people to work from home and a requirement for vaccine passports to gain access to large venues.

Many pubs and restaurants have already reported a rise in cancellations because of public concern about the new Omicron variant of coronavirus, and demand in city and town centres is expected to be further hit by the work-from-home guidance that takes effect on Monday.

Catherine McGuinness, policy chief at the City of London Corporation, the local authority for the capital’s financial district, said: “Christmas has been cancelled for many City shops, restaurants, pubs and other businesses that rely on footfall from workers in nearby offices.”

But Treasury officials said there would be no further support for businesses during the so-called Plan B restrictions for England that the prime minister announced on Wednesday. “There is already support in place,” said one official, adding that this could change if further restrictions were imposed.

Until March next year, hospitality, leisure and retail companies can secure business rates relief at 66 per cent, but capped at £2m per business, while commercial tenants are protected against eviction.

Value added tax paid by hospitality and tourism businesses has been set at 12.5 per cent until April, when it is due to return to the standard 20 per cent rate.

The Treasury said its Covid-19 support package for businesses would continue into the spring of next year and “we will continue to respond proportionately to the changing path of the virus, as we have done since the start of the pandemic”.

However, the government’s existing assistance for companies falls short of what business lobby groups have said is required.

Ruby McGregor-Smith, president of the British Chambers of Commerce, said there needed to be “a package of support to ensure that we get through a challenging winter without serious damage to our economic recovery”, including grants for affected companies and their supply chains.

Emma McClarkin, chief executive of the British Beer and Pub Association, a trade group, said members estimated the Plan B restrictions would hit sales by up to 30 per cent.

“Government should not be making decisions [on financial support] without assessing the impact on sector . . . we don’t know the full detail of how this is going to be implemented,” she added.

Trade group UKHospitality called for further business rates relief, grants, rent protection and extended VAT reductions. “Anything less would prove catastrophic,” said Kate Nicholls, chief executive.

In Scotland, where vaccine passports were introduced for nightclubs and large events in September, sales dropped between 30 and 40 per cent compared to 2019 and venues had to shoulder an additional £559 weekly cost on average due to the need for extra door staff, according to the Night Time Industries Association, a trade body.

Alistair Storey, chair of Westbury Street Holdings, which owns the fast-food chain Benugo, said city centre businesses would be hit hardest by the government’s advice to work from home.

Nick Mackenzie, chief executive of Greene King, the pubs group, said the advice “re-emphasises the need to support London and the big cities”.

On Thursday, companies across England told employees they would be expected to work from home from next week, although some exceptions will be made.

These included accountants Deloitte and EY, law firms Freshfields and Slaughter and May, the bank NatWest and the insurer Aviva.

However, Lloyd’s of London’s underwriting room will be kept open for business despite the government’s work from home guidance.

The insurance market said the trading venue was needed to support brokers and underwriters during the crucial December renewal season.

The underwriting room has been shut three times during the coronavirus pandemic, raising questions over the future of face to face dealings as remote trading becomes more entrenched.

“We remain committed to supporting the market through the busy January 1 renewal season and so the underwriting room will remain open to help facilitate situations where there is a clear need for face to face trading,” said Lloyd’s.

Additional reporting by Michael O’Dwyer, Stephen Morris and Kate Beioley