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UK pubs could be paying off Covid-19 debt for more than five years

Hospitality businesses still face a struggle to survive as pubs approach a double-whammy of debt repayments and rising costs as the country emerges from the crisis

More than half of the UK’s pubs say they’ll struggle to keep afloat even when all Covid-19 restrictions are lifted, new research has shown, with some landlords facing a five-year wait to see a profit as the pandemic continues to hammer local businesses.

Just 42 per cent of pubs which responded to the British Institute of Innkeeping (BII) survey are confident of making profit when pandemic measures end across England on July 19 and continue to ease in Scotland and Wales.

Pub landlords are concerned about the double-whammy of debt repayments and rising costs as the country emerges from the crisis, with full rent repayments expected from this month and staffing, utilities and food and drink supplies all increasing in cost.

“The resilience, goodwill and determination of our nations’ pubs has been incredible to witness over the course of the pandemic,” said Steven Alton, chief executive for the BII. “However, it is clear to see that this alone will now not be enough to ensure that their businesses survive.

“These small businesses are essential and valued hubs of their communities, providing accessible, social spaces for everyone to come together to connect, celebrate and commiserate.”

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The figures paint a fragile picture of the UK’s hospitality sector with 55 per cent of pubs having built up debts of more than £20,000 each during the pandemic, rising to £80,000 for a quarter of businesses. 

“Pubs provide so much more than just a place to socialise, contributing significantly to local employment, local suppliers and the wider economy, with the average pub paying around £140,000 into the Treasury every year,” Alton added.

Nearly 60 per cent said it will take more than two years to pay those debts off, with one in two of those believing more than five years will pass before they have fully paid off their Covid-19 debt.

Around half of pubs are battling against a hospitality staff shortage, with almost half struggling to hire as many workers as they need.

Workers and trade unions previously told The Big Issue low pay, poor conditions, precarious contracts and a post-Brexit exodus of staff from abroad were all driving workers away from the sector. 

Robb Kirby-Wilson, a 48-year-old Northampton resident who left his career in hospitality during the pandemic after 25 years in the industry, said: “I wanted a life and I wanted better pay. Last year gave me breathing space to commit to that.”

It’s a trend forcing pubs to up the wages they offer in an attempt to attract more staff. Around 72 per cent of businesses reported having to raise wages for front-of-house workers, with two fifths of pubs boosting pay by more than 10 per cent.

Another 57 per cent have increased wages for back of house and kitchen staff.

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Alton said: “They urgently need support from government in the form of an extension of the business rates holiday to April 2022 for England to match the devolved nations, an extended VAT reduction, an immediate cut to duty on draught products specifically for pubs and an urgent reform of the entire rates system. 

“This support is an investment in the future of not only these vibrant and vital community spaces, but also in the economic recovery of the UK.”

The majority of pubs said they were facing a hike in the cost of supplies – with 72 per cent paying more for drinks and 59 per cent paying more for food – while utilities such as energy and water bills had risen “dramatically” for nearly a third.

“Our pubs are an essential part of our national heritage and will be needed now more than ever as we rebuild the social connections that we have lost over the last 17 months,” Alton said. “With ongoing support, they can be at the heart of the economic recovery as well as at the heart of communities across the UK, bringing us all back together again.”

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