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Suppliers seek clarity over support

Published:  07 May, 2020

Key suppliers to the shuttered on-trade have called on the government to help them survive Covid-19, pointing both to clarification on reopening measures and greater financial support.

Following on from the Irish having laid out a “very clear plan” last Saturday, “we now need clarity”, said David Gleave MW, MD of Liberty Wines.

“In Ireland they have referred to social distancing guidelines applying in restaurants. I’m sure our government will do the same. This isn’t going to work for the vast majority of restaurants, many of which may decide to remain closed rather than open and operate at a loss. As a result, the government needs to adopt a sector-by-sector approach to furloughing and ensure the hospitality industry is given the support it requires after other sectors go back to work,” he said.

This is echoed by Troy Christensen, chief executive at Enotria & Coe: “There needs to be a clear plan on opening and any restrictions will require additional trade support. HMRC needs to protect the full value chain for those industries they closed, not just a few preferred links in the chain.” The duty support and loan schemes are “still counterproductive to the long-term health of the on-trade”, he added.

Looking to the financial side, Gleave also calls on the government to pay the furlough on both the salary and the tronc received by hospitality staff.

“PAYE has been paid on both, so it should be seen as part of a pub or restaurant worker’s salary. If it doesn’t, the hospitality industry may face the same problem as farmers are currently facing: there won’t be anyone left to do the work required. If this is the case, it will further damage sales of wine to the on-trade,” he said.

Following cabinet minister Michael Gove confirming that pubs, bars and restaurants will be among the last to reopen for business, the WSTA has also made it clear that it is essential for the businesses supplying them that the government extends the furlough scheme and makes it flexible to work around part-timers and shift patterns.

“Our members are also keen for HMRC to make it easier to defer duty, to allow wine and spirit goods back into duty suspense and extend bad debt relief to excise duty,” said Miles Beale, chief executive of the WSTA.

Another area government should address is the “stranded duty”, added Christensen.

“When the government shut down the on-trade, products from customers and events
were returned to wholesale or stranded in outlet as tax-paid. The beer suppliers were able
to recover tax on spoiled beer,
it would be great if wine and spirits businesses could move tax-paid goods back under bond.”

With cash now remaining the biggest problem for on-trade suppliers, there is a clear consensus that what those businesses need is for the government to recognise their value and the impact of the shutdown in the same way it has other parts of the hospitality sector.

“Their sales have been
reduced to zero practically overnight but, unlike bars and restaurants, suppliers are not able to access the full suite of government support, including the suspension of business rates and certain grants. This is unfair and the government must act urgently to extend the definition of hospitality to those supplying into the sector,” said Beale.

“What we must bear in mind is that the support offered to suppliers so far is all just loans and will have to be paid back further down the line – which is putting a huge burden on businesses already at breaking point.”