Covid: Rishi Sunak to hold Omicron crisis talks with businesses

Chancellor Rishi Sunak is set to meet business leaders for crisis talks on Friday as firms warn of lost bookings.

Fears about the Omicron variant of coronavirus have prompted many people to cancel Christmas dinners and parties, hitting businesses.

Hospitality firms and business groups have told the chancellor their trading situation was deteriorating rapidly.

Mr Sunak said the government would do "whatever it takes" to support jobs, but that funding was already available.

This includes £250m that has been provided to local authorities for grants to support businesses.

It is understood that Mr Sunak will meet with major UK business groups including the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC), the Institute of Directors, Make UK and the Federation of Small Businesses on Friday afternoon.

The BCC said it will ask the chancellor to revert VAT for hospitality and tourism business back to the emergency rate of 5%. It also wants the government to reinstate 100% business rates relief for retail "to give businesses the financial headroom to weather this challenging period".

In addition, it will ask the Treasury to "make additional grant funding available which can then be administered locally and distributed on a needs basis".

On Thursday Mr Sunak was in California but held a hastily convened call with representatives from business groups and companies including Greene King, Nandos and Whitbread, which owns Premier Inn.

Attendees described the chancellor as being in "listening mode" and said Mr Sunak appreciated the situation was deteriorating rapidly.

The chancellor asked what kind of assistance they were looking for, and there were specific requests for an extension of the discounted VAT rate of 12.5% beyond its scheduled end on 1 April.

The participants also requested a deferral of any business rates due in the first quarter of 2022, and grants to businesses in most dire need.

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After Thursday's meeting, Mr Sunak flew back to the UK a day early from his US trip where he was meeting technology firms to try to encourage inward investment.

Before flying, he said the situation in the UK with Omicron "is very different to what we've done and encountered before".

"The government is not telling people to cancel things. It's not closing down businesses."

Immediate priority

Mr Sunak said that it is "a difficult time for the hospitality industry" but he said there were existing support measures in place to help the industry.

"Until spring of next year, most businesses in the hospitality industry are only paying a quarter of their normal business rates bill. They are benefiting from a reduced rate of VAT all the way through to next spring.

"And thirdly, there is about quarter of a billion pounds of cash sitting with local authorities that's been provided by government to support those businesses who need it."

He added that his immediate priority is to make sure that £250m "gets to those businesses as quickly as possible".

Christmas trading can account for up to 25% of a hospitality firm's yearly profits, experts say.

The hospitality industry has warned of a devastating effect of public concern over the rapid spread of the Omicron variant of coronavirus.

UKHospitality said pubs, bars and cafes had already seen trade drop by a third, and "are expecting a further 22% drop in bookings for December".

Kate Nicholls, UKHospitality's chief executive, said: "Christmas trade is always crucial for the hospitality industry, making up as much as a quarter of the year's profit for many businesses.

"Last year Christmas was cancelled and so much rested on this December period for businesses already staggering under a burden of debt incurred from the pandemic and facing rising costs across the board.

"If operators are unable to trade profitably over the next month, many will simply not survive - and those that do make it through face a return to 20% VAT in April."

She called for the government to keep VAT at 12.5%, suspend business rates payments for the first quarter of 2022, and reinstate recovery grants.

The British Beer & Pub Association warned on Thursday that pubs would sell 37 million fewer pints over Christmas, losing out on £297m.