The Government's recent announcement has provided hope to the night time economy going forward, but in the meantime continued support will remain vital for its businesses to survive.

In his address to the nation on Monday afternoon, the Prime Minister set out the government’s roadmap for cautiously easing lockdown restrictions in England. He shared the latest data on infection rates, hospitalisations and deaths, as well as early data showing the efficacy of vaccines.

The roadmap for leaving lockdown, which was published on on Monday, seeks to balance health, economic and social factors with the very latest epidemiological data and advice.

With early data suggesting that the both the Astra Zeneca and Pfizer vaccines are having a "spectacular" impact on preventing serious illness there is certainly cause for optimism, however, despite the vaccine rollout being one of the few real highlights for the Government in recent months, the roadmap out of lockdown is deliberately cautious, designed to avoid the risk of undoing the progress made thus far. 

Assuming all goes to plan, and the "four conditions" are met on each and every test date, then the PM is hopeful that the lockdown in England will be lifted around 21 June 2021, meaning all legal limits on social contact removed with the ambition to reopen the final closed sectors of the economy such as night clubs. 

In the meantime, the hospitality sector waits anxiously for details from Rishi Sunak of further government support to bridge the gap to a new kind of normality. Currently over a million people in the hospitality industry are still furloughed and unless the scheme is extended beyond April, fears of a wave of redundancies loom large.   

Labour is also calling for an extension of the 100% business rates relief for retail, hospitality and leisure businesses for at least six months and for the government to follow the example of Labour-run Wales by capping relief so that support is targeted to those that need it most. Labour is also calling for the reduced rate of VAT for the hospitality, leisure and cultural sectors to continue for another six months or until three months after the lifting of health restrictions – whichever is later. Operators have also called upon the Government to consider providing VAT relief for wet led sales businesses until the end of 2021.

There are also growing calls from the hospitality sector for a continuation of the de-facto "standstill" created by the introduction of various temporary measures introduced by CIGA 2020, which included the removal of the threat of personal liability for wrongful trading from directors and a moratorium on enforcement by creditors, including landlords. 

Regardless of whether or not these recommendations are embraced, the financial health of the hospitality sector as it emerges from lockdown will be dismal. Many operators will have built up significant creditor arrears over the last year or so, especially those who have been unable to reach agreement with landlords on rent payments. 

Demographics will also play a key part. Given the population has become ever more comfortable in their own local area in the past year, they may be less inclined to return to the cities and immediately frequent localities with denser populations. We may, therefore, see a quicker recovery in smaller operators in local areas, although query whether they will have had much clout in negotiating with their stakeholders in the interim, compared to larger businesses. 

There has been hope with the FCA trial case on business interruption insurance policies, setting favourable precedent to support policyholders' claims due to COVID and providing them with a much needed lifeline. However, going forward these policies as we know them will become scarce and premiums will likely go up.

Vaccination passports have also come up in the public forum in recent weeks. Could their introduction encourage an earlier opening of more at risk venues, such as night clubs, let alone the lower risk restaurants and bars? Nevertheless, this forms part of a wider ethical decision to be made by the Government, which is out of the hands of the operators in the sector.

Nevertheless, the inescapable reality is that the insolvencies of retailers such as Debenhams and Arcadia Group alongside the transition from traditional "bricks and mortar" retailers to online merchants have decimated the high street. Hospitality has a key part to play to increase footfall and encourage the delicate consumer ecosystem on the high street. It is therefore of paramount importance that the support provided to the hospitality sector thus far is further extended so that it is able to play its part in rebuilding the economy and getting Britain back on the road to recovery.

Read more about the Restructuring team's expertise here.

Key Contacts

Fraser Ritson

Fraser Ritson

Partner, Restructuring
London, UK

View profile