More pubs and restaurants face collapse as councils hold on to £300m in grants

Pubs and restaurants face another threat to their survival after less than half of a £635m government support scheme was paid out to ailing businesses.

Figures compiled using official data suggested that, by late February, hospitality bosses had received only £305m of the cash promised by the Treasury to help them ride the winter wave of omicron.

The one-off grants had been announced in December as a lifeline for businesses as Covid swept across the country once more, leaving many pubs and restaurants under-staffed and struggling with cancellations. Local authorities had been tasked with distributing the grants, which were for as much as £6,000 per business.

Rishi Sunak, the Chancellor, unveiled the scheme at the time by saying: “I know the current situation is very difficult especially for those in the hospitality industry.”

Some 200,000 hospitality and leisure businesses were expected to benefit from the grants to compensate for an average 40pc fall in revenue in the wake of the Government’s Plan B restrictions.

However, the latest figures compiled by Altus Group suggested that as many as 29 councils had distributed no grant funding at all by late February. The scheme closed in the middle of March and had to make all payments by March 31.

Robert Hayton, UK president of Altus Group, branded the scheme a “post code lottery”, and said: “These types of businesses saw one of their most valuable trading periods wiped out and simply didn’t get the support they needed quickly enough.”

It comes as pub and restaurant chiefs warn they are now on the brink, as the Chancellor pulls back other Covid support schemes. Last Friday, the rate of VAT was moved back to 20pc for the sector, compared to 5pc when the pandemic first hit, and 12.5pc more recently.

Many are also struggling with record inflation, seeing their energy bills and food costs spiral.

Robert Cook, chief executive of TGI Fridays owner Hostmore, said the sector was suffering with a “quadruple whammy”. 

He said he had been hopeful that Mr Sunak would press pause on plans to return VAT to pre-pandemic levels. “I thought that’s something he might concede. I was pretty disappointed with that.”

Last week, Kate Nicholls, the chief executive of industry body UKHospitality, said removing the “lifeline of a lower rate of VAT might prove fatal” for many businesses in the sector.

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