SLTA pushes the Pub Code adjudicator to take action now. Road map for easing lock down – SLTA wish list. Additional small business grant scheme now accepting applications. More things lurking in the background – commercial rates. VisitScotland webinar – recovery of tourism.
SLTA PUSHES THE PUB CODE ADJUDICATOR TO TAKE ACTION NOW
The SLTA has written to the newly appointed Pubs Code Adjudicator, Fiona Dickie, asking for immediate action to be taken to address the issue of some Pubcos continuing to seek commercial rents from their tenants at a time when their businesses are closed and have no income. In congratulating Fiona Dickie in her new appointment, the SLTA said:-
“The Scottish Licensed Trade Association has three key aims – Trade Protection, Trade Development and Trade Liaison and constantly campaigns for the future well-being, prosperity and advancement of Scotland’s on-trade licensed premises, including Scotland’s tied pubs and bars.
The coronavirus pandemic and its economic consequences represent an existential threat to tied pub businesses across the country. The SLTA’s focus at this immensely challenging time is, therefore, to ensure that pubs survive the coming weeks and months ahead until we return to some sort of “normal” operation, whatever that may be.
The impact of coronavirus has had a dire effect on our industry and tied pub tenants need help now to confront this threat and ongoing collateral damage to their businesses. In the first instance, there quite simply needs to be a cancellation of commercial rents during the period in which pubs are closed, unable to operate and generating no income to cover ongoing costs. Ongoing support will also be needed if such businesses are to survive beyond the lock down including zero rent for a realistic period of time after exiting lockdown.
Whilst some PubCos have introduced assistance measures, many of the largest pub-owning companies in the country continue to charge commercial rent to their tied pub tenants.
Tenants tell us some of the large PubCos are insisting on the payment of commercial rent over other outgoings, such as wages, at a time when the only income pubs have is likely to be government grants. These grants should be helping small businesses survive the crisis, not serving the interests of the shareholders of big PubCos.
The Scottish Government Finance Secretary has said that businesses that do not need these grants should not apply for them. They should not be extracting the value of these grants from local pubs struggling to survive either.
Furthermore, the SLTA does not believe that rent deferral or rent holidays by PubCos adequately address the position of tied pubs. These simply create a burden of debt on tied pub tenants, which will make recovery impossible for many businesses when restrictions on trading are eventually lifted, which for the hospitality industry will be some time yet.
We believe that tied agreements should provide a fair share of risk of reward to both parties, tenant and landlord, yet there is no fairness in the continued charging of commercial rents on pubs that are unable to open.
In your article on being appointed the Pub Code Adjudicator, you stated that you were expecting pub owning businesses to “make themselves accountable for how they are supporting, and can support, their tenants to ensure they survive the outbreak, by being transparent and fair about their approaches”. You went on to say that “I understand that tenants may be feeling financial and mental strain in these uncertain times, and this makes it all the more important that POBs take care to ensure that they behave towards them in ways which cannot be received as oppressive or unreasonable.”
As an Association we are pleased to hear this and that you acknowledge the Pub Code Adjudicator “now needs to make a difference at an extraordinary time”.
The mental strain that this situation is putting on business owners should not be underestimated and we welcome your understanding that “tenants may be feeling financial and mental strain in these uncertain times and this makes it all the more important that POBs take care to ensure that they behave towards them in ways which cannot be received as oppressive or unreasonable.” The SLTA hopes that the PCA will take appropriate action where necessary if this ethos is not reflected in the behaviour of POBs.
The Scottish Licensed Trade therefore asks in the strongest possible terms that the Pub Code Adjudicator takes action to have PubCos cease charging commercial rent to tied tenants until restrictions on opening are lifted and the recovery in our sector can begin.
The continued charging and collection of commercial rent by PubCos and deferral plans will destroy many tied pub businesses and it must be stopped.”
The SLTA has also raised this issue with all MSPs and the Scottish Government Minister for Business, Fair Work and Skills, Jamie Hepburn MSP.
ROAD MAP FOR EASING LOCK DOWN – WISH LIST
The SLTA was recently asked to give a brief wish list for easing the current lock down.
“In general, a measured long-term financially supported, practical and realistic plan needs to be introduced so that, as much as possible, avoids the potential for a second spike leading to industry back at the starting blocks of another lock down. A stepped financial supported return to “normality” is a must if businesses are to survive and recognition that when businesses do open, financial support is not immediately withdrawn. It is more than apparent that the hospitality sector will be the last to reopen and there needs to be recognition that one fix does not fit all in this diverse industry sector.
In respect of pubs, bars, restaurants and cafes, the suggestion is that restaurants and cafes may open sooner than pubs and bars. If social distancing measures can be assured we fail to understand why pubs and bars are separated from this group. There is little difference in Scotland where bars, in general, have become restaurants and restaurants have become bars. Under licensing legislation there is no differential between licensed premises, other than their individual operating plans. Therefore only allowing some types of licensed premises to open and operate before others may well be challenged in the courts.
Whether or not these types of businesses are reopened together, our main concern is that if we do open under current social distancing restrictions, it will not be financially viable to actually open. Indications are that capacity levels in bars and pubs could drop by between 60% – 80% depending on the layout of premises. In hotels, break-even usually occurs at the 65% – 70% plus occupancy, so again current social distancing restrictions would not achieve sustainability for such businesses.
There is also the concern that any ongoing Government support will stop if we are “open”. There have been a variety of opinions on how our industry should open and of course we all want to get back into operation as soon as possible, but in reality this is going to take many months, even years, to get back to even where we were before the lock down. With successful re-opening during 2020 looking unlikely, support will be needed until 2021 at least.
If we are allowed to open, but under such restrictions that it is not viable to open, and government support ceases, then we are in the same horrendously precarious position as our industry is in now. If the industry is to open, then continuing government support will be essential for ongoing businesses costs until businesses are fully operational, which is why the SLTA and other licensed trade bodies have jointly written to the Scottish Government and the UK Government urging more ongoing support for businesses.
The SLTA would also echo the calls of others in that to avoid the worst scenario of the hospitality industry “opening” to some extent, coupled with a cessation of current and potential ongoing support from Government and current social distancing rules remaining, the following range of measures, at the least, would need to be introduced:-
- Extend furlough and introduce a further developed, flexible, phased and part time scheme for the foreseeable future.
- Extend Business Rates holiday until signs of business recovery.
- Reduction in VAT for hospitality businesses as soon as possible .
- Further extension of time for repayment of deferred VAT.
- Development of a scheme to cover on-going businesses costs
We would also take the opportunity at this point to state that whilst we must all plan ahead for exiting this lock down, Government action still needs to be taken to address the 30% of grant applications in Scotland that have not been received by industry and the forgotten sector (above £51k rateable values) who have had no automatic grant support.”
ADDITIONAL SMALL BUSINESS GRANT SCHEME NOW ACCEPTING APPLICATIONS
The second phase of the Small Business Grant scheme which extends grant support to all subsequent eligible properties is now open for applications.
This phase ensures that in addition to existing grants of £10,000 or £25,000 for the first property – businesses may now qualify for grants of £7,500 or £18,750 on all subsequent eligible premises.
In addition, retail, hospitality and leisure properties with a rateable value up to £18,000 that do not qualify for the Small Business Bonus Scheme, may now qualify for Small Business Grants.
The Finance Minister, Kate Forbes said:-
“The Scottish Government is delivering a strong package of business support worth around £2.3 billion, and I am pleased that today marks the opening of the second phase of our Business Grants Funding Scheme, increasing the eligibility for multiple properties within the same business.
Our actions have been welcomed by the private and third sectors alike, and are making a real difference to people’s lives in Scotland.
I would like us to do more, but ultimately we are constrained financially and through our limited devolved powers. Without the flexibility to borrow we cannot provide further support to individuals and businesses, which is why the UK Government must now permit further fiscal flexibility to allow us to respond more fully.”
The Small Business Grant Scheme is being administered by local authorities. Businesses can get information on how to apply via their local council.
MORE THINGS LURKING IN THE BACK GROUND – COMMERCIAL RATES
The UK Government Communities Secretary, Rt Hon Robert Jenrick MP, has announced that a Revaluation for business rates will no longer take place in England in 2021. Legislation had been introduced to bring the next Revaluation in England forward by one year from 2022 to 2021, but “following the recent economic impacts of the coronavirus pandemic ministers want to ensure businesses have more certainty during this difficult time.”
New legislation will not now be enacted which means that existing legislation directs that the next Revaluation in England takes place on 1st April 2022, currently the same date on which Scotland’s next Revaluation has been legislated for. However, today’s Westminster Government announcement falls short of explicitly confirming that 2022 would indeed be the date of the next Revaluation; it is to be subject to further consideration.
In addition the UK Government reaffirmed its continuing work on the fundamental review of business rates, with the key aims of reducing the overall burden on businesses, improving the current business rates system, and considering more fundamental changes in the medium-to-long term.
Whilst business rates revaluations occurring at the same time across the UK would align respective changes in rates liabilities and help equalise any corresponding impact between England and Scotland, the technical valuation dates (“Tone Dates”) for the next Revaluations would also require to be aligned. As things currently stand, England has legislated for a Tone Date of 1st April 2019 whilst for Scotland it is 1st April 2020. Legislation would be required should the intention be to change either, or both, of these dates.
Rating is a devolved matter in Scotland and today’s announcement does not directly affect Scotland. The Rates Bill, confirming the 2022 Revaluation and associated matters in Scotland, came into effect on 1st April after years of due process. If Scotland is to change the date of the next Revaluation or Tone Date then new primary legislation will be required, with the corresponding formal procedure, consultation etc beginning afresh.
For the time being, the indications are that no questionnaires will be issued by Assessors in Scotland under their new powers and penalty regime introduced by the new legislation.
VISITSCOTLAND WEBINAR – RECOVERY OF TOURISM
Tourism businesses across Scotland can tune in and hear from VisitScotland’s Director of Industry & Destination Development, Riddell Graham, in a live webinar focused on the recovery of tourism on Tuesday 12 May.
VisitScotland is following the respond, reset, restart and recover model being used across the public sector and has teamed up with Bill McFarlan from Pink Elephant Communications to help host and deliver the session, which looks at the recovery plan devised through the Scottish Tourism Emergency Response Group (STERG), with the chance for you to ask questions.
This webinar is part of a new series planned for over the next few weeks to provide you with insight from VisitScotland’s senior team into some of the issues and challenges we’re all navigating during COVID-19.
Click here to sign up.