Sunak must act quickly to ease hospitality sector's Covid jitters | Nils Pratley


“Our economic emergency has only just begun,” Rishi Sunak warned this week. On Thursday, the next stage of that emergency intensified for tens of thousands of businesses as new lockdown restrictions for England were announced. “At best, a restrictive straitjacket, and at worst a lockdown in all but name,” said UK Hospitality, the trade body.

That analysis seems accurate since about 98% of the sector’s trade has been placed in tiers 2 or 3. If the new restrictions are sustained until the end of March, the largest part of a cashflow-dependent industry will have been operating under some version of lockdown for about five months without a break.

Greene King, with 2,900 pubs in the UK, thinks its tier 2 premises are “unlikely to be profitable” and its tier 3s will close. At the smaller end of the industry, one wonders how many pubs and venues will shut their doors permanently.

Cries can be heard for more support – and Sunak will clearly have to offer something. But it is also important that the chancellor makes his decisions quickly, which has not always been his forte.

The furlough scheme has already been extended until the end of March, which felt a long way off when the current lockdown to 2 December started. But companies will now be asking whether it is worthwhile to try to hang on if financial support – business rates is another big one – could be removed in April.

Sunak may be tempted to keep his options open. After all, the UK will borrow an astonishing £394bn this financial year and he is under pressure to avoid handouts that may not be needed when (we trust) vaccines arrive. But, on the business frontline, any form of certainty about support matters at this point. Don’t take things down the wire, pleaded the CBI. It’s good advice.

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What should Royal Mail provide in return for dropping letters on Saturdays?

Most people wouldn’t be bothered terribly if Royal Mail never brings them a letter again on a Saturday, Ofcom has discovered. The current six-days-a-week letter service meets the needs of 98% of consumers, says the regulator’s survey; a reduction to five days a week would still get a thumbs up from 97% of punters. In the age of emails and WhatsApp, bills can wait.

The question is how to respond to the findings. Downgrading the universal service obligation (USO), as it applies to letters, from six days a week to five would allow Royal Mail to make cost savings of £125m to £225m each year, thinks Ofcom. Naturally, the company sounds keen and the CWU union doesn’t.

Only parliament can reform the USO and it’s unlikely any changes would happen before 2022. But the wind is blowing in only one direction on this issue, and the real question is probably what Royal Mail should provide in return for dropping letters on Saturdays.

Keith Williams, the chairman, seems to understand the point. He is talking the language of “rebalancing” the USO in line with growing demand for parcels. Does that mean volunteering to make parcels – currently just a five-day-a-week obligation – a binding six-day necessity? Possibly. And, since Royal Mail already delivers parcels on six days out of choice, the extra demand would hardly be onerous.

Other ideas are available, but the ambition here ought to be clear: if something is taken away from the USO, something else should be added.

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Leveson lends new air of seriousness to Boohoo review

It’s not the Leveson 2 inquiry that was expected. And, of course, it’s not an inquiry since Boohoo has had one of those already – Alison Levitt QC found that allegations of employment abuses in the fashion retailer’s UK supply chain were “well-founded and substantially true”.

Instead, Sir Brian Leveson, who led the public inquiry after the phone-hacking scandal, will oversee Boohoo’s efforts to clean up its act. He will provide independent oversight of the company’s “agenda for change” programme.

It’s a strong appointment and the pledge to publish Leveson’s reports to the board suggests Boohoo now understands the need for transparency; the company had required a prod before it committed to publishing Levitt’s report in full, but has pledged its commitment to the changes now planned.

The new air of seriousness will be complete if the Boohoo co-founder and 12.5% shareholder Mahmud Kamani – who did not emerge well from Levitt’s report – agrees to appoint an independent chairman. Maybe Leveson can have a word.



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