Open Letter

Opposite is the letter we have sent to government, please do read and add your support. In summary we ask for:

1. The Business Rates Relief needs to be extended for a further 6 to 12 months;
2. The Vat on food of 5% should continue for another 12 months and consideration should be given to reducing Vat on drink sales too;
3. The CBILs 1 year interest free needs to be extended to 2 years and the repayment term extended to 10 years;
4. Give consideration to paying the NI/PAYE contribution on the CJRS for small businesses only;
5. The Govt should support the landlord / tenant negotiations by ensuring no foreclosures by banks on landlords;
6. Deferred VAT and PAYE via the Time to Pay Scheme needs to be extended to 3- or 5-year payment plans.

Dear Boris Johnson, Rishi Sunak, Kwasi Kwarteng & Nickie Aiken

I write to you from the Soho Business Alliance – a recently formed organisation, which has garnered incredible support in these troubling times. SBA’s origins in fighting for small hospitality businesses as a response to the Covid-19 pandemic, has grown into a fully functioning alliance, working closely with Westminster City Council, residents, workers and visitors to Soho.  Our members now come from all business sectors.

Soho is the second largest employer per square mile in the UK after the City of London. It is iconic worldwide and is famous for its small independent businesses, its inclusiveness and diversity through its LGTBQ venues and the various music venues and theatres alongside the Soho film industry.

Following the imposition of lockdowns across the UK, all bars and restaurants are closed with no certainty about the timing of reopening.  But in view of the comments from the Prime Minister about the potential for lifting restrictions as the vaccination programme progresses, we anticipate that hospitality will be closed for trading until end of March at the earliest, but recently mooted to be the first bank holiday weekend in May, and we expect some of the previous restrictions to remain on reopening. Any form of Social Distancing will continue to severely impact our business.

When the Government support programs were considered, it was assumed that this pandemic would be well behind us as we enter spring 2021.  This is not the case.  The extended lockdowns mean we should have extended Vat cuts, business rates holidays and further grants to support the hospitality industry.  There are also opportunities to consider a Hospitality Recovery Fund and put together a detailed road map out of the tier system.  Now it is vital that the government urgently reviews the opportunity to continue to support Hospitality as we remain closed in the coming months.  The following are some points to consider prior to the Budget 2021:

• The rateable values of all the sites in Soho has meant that virtually no one received any grant support in March 2020. All the rateable values are well above the £51,000 threshold for grants.

• Most of the buildings in Soho are small townhouses thus leading to small and independent bars and restaurants, rather than big chains. The rents are very high per square foot, compared the rest of the UK and the number of seats/covers per restaurant are very low. The financial impact of social distancing and closure is significantly greater than the average UK restaurant.

• The current CJRS scheme actually adds costs to our business through the NI, pension and holiday contributions. We welcome the support for our teams but there is a large cash cost to this scheme – especially for small independent businesses like ours.

• We will be closed for circa 8 months of the 12-month Vat on food of 5% and have therefore barely benefitted from this excellent support. This is currently due to end on March 31st.

• We are due to start paying extremely high business rates this coming April.

• We are about to start repayments on our CBILs this coming April/May, as the 12 month interest free runs out.

• Rent, Vat, PAYE and supplier payment deferrals will all become payable over the coming months.

• The £3k per month grants and £9k in January might cover the costs/cash burn in a restaurant in smaller cites, towns and villages, but they definitely don’t meet the significantly higher costs that we face in Soho and London in general.

We are therefore facing an extremely difficult 12/18 months ahead and many of our members won’t survive under this avalanche of costs due for payment whilst we are closed or reopened with significantly lower demand. Q2 and Q3 2021 are absolutely the key quarters when most business failures will occur. 

It is therefore imperative that the Chancellor and Business Secretary urgently publish a financial support route map for the hospitality sector. The Government support to date has been broadly good but it is essential that this good work is not undone through the lack of correct financial support, through this next more difficult stage.

We have consulted with our members and have listed below what we believe is the correct and balanced support that is required.

1. The Business Rates Relief needs to be extended for a further 6 to 12 months;
2. The Vat on food of 5% should continue for another 12 months and consideration should be given to reducing Vat on drink sales too;
3. The CBILs 1 year interest free needs to be extended to 2 years and the repayment term extended to 10 years;
4. Give consideration to paying the NI/PAYE contribution on the CJRS for small businesses only;
5. The Govt should support the landlord / tenant negotiations by ensuring no foreclosures by banks on landlords;
6. Deferred VAT and PAYE via the Time to Pay Scheme needs to be extended to 3 or 5 year payment plans.

Without the above support, government is guiding many of our members and the hospitality sector on a whole, towards mass failure, CVAs and liquidation.  This is a costly route for the government, with 80% guaranteed CBILs, outstanding VAT and PAYE and so much more.

When the country emerges from this pandemic, surviving hospitality businesses will be pivotal in restoring a sense of normality, by providing experiences for a nation that has sacrificed so much. If adequately supported, hospitality can play a vital and significant role in reviving the UK’s economy, driving recovery across the UK, as it did following the 2008 financial crisis, when it created 1 in 6 new jobs over the subsequent decade. Hospitality can only play this role if it is appropriately supported while restrictions are in place and trade is recovering. During the crisis, Hospitality has supported key workers, communities and the vulnerable during times of unprecedented national crisis. 

Soho is the heartbeat of London and one of the UKs biggest visitor attractions, with bars, cafes, restaurants, nightclubs, independent retail, theatre, a huge workforce, including the film production industry for the world, while always being the sanctuary for LGBTQ community.  Soho is a precious attraction to the UK in these Post Brexit times, Soho needs to be the finest example to the first response from Covid-19.  This is an opportunity to shine.  To Build Back Better.  Please don’t drop the baton now…

We very much welcome your response and look to arrange a meeting to discuss ways of increasing the chances for our members and Hospitality to survive.