Scottish hospitality firms run up £1bn coronavirus debts

Nicola Sturgeon says the Scottish Government is trying to get support funds to businesses "faster" after hospitality leaders said £1 billion of debt was taken on by firms to get through the pandemic.

Industry leaders are now calling for politicians to be more honest about the funding available and get it to the frontline quicker.

It emerged that companies in the Scottish Hospitality Group (SHG) have taken on more than £16 million of debt since lockdown to stay afloat.

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A statement from the industry body warns that if all of Scotland’s 16,000 licensed premises were in the same position as SHG’s members, the industry as a whole would be carrying a debt burden of anywhere between £800m and £1.2bn.

Pubs in Edinburgh's Grassmarket have been among those forced to close
Pubs in Edinburgh's Grassmarket have been among those forced to close

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Stephen Montgomery, spokesperson for SHG, said: “This debt is necessary to keep jobs alive, but it will come at a heavy price to the sector and that’s if we even survive.

“It’s another reminder of why both governments need to stop playing politics with lifeline support for the sector.

“This week we’ve seen [finance secretary] Kate Forbes re-announce £25,000 each for bigger operators, which she already announced and agreed with the sector in December before the Boxing Day lockdown. And last week we had [Chancellor] Rishi Sunak admitting his £375m wasn’t new money.

“Both sides are at it and this confusing, conflicting behaviour needs to end. Businesses must have clarity and honesty about what’s available and for that help to be in their hands much quicker than it has been so far.”

The debt is a combination of coronavirus business interruption loans (CBILS), bank loans, overdrafts and payment deferrals and is necessary to pay property and equipment rent, among other fixed costs.

Ms Sturgeon said: "We're trying to get it to businesses faster, as fast as possible and the finance secretary Kate Forbes is focused on making sure that as we announce financial support, any arrangements for getting that out the door are put in place as quickly as possible and it gets to businesses as fast as possible.

"I think we can further improve that to be frank about it."

Ms Sturgeon acknowledged that hospitality had been worst hit than many other industries.

But she said: "Right now there's no alternative to this and that's the hard thing."

Additional support for the financial and retail sector was unveiled by Ms Forbes, which will see firms get "top-up" payments in addition to that which they were already scheduled to receive.

It emerged last week that SHG members took in only 20 per cent of last year’s earnings during December.

It means that £9.6m of revenue was lost in money which would normally keep businesses alive until the spring. During lockdown, businesses continue to spend on average nearly £6,000 per week per premises on fixed costs and contributions to the furlough scheme.

The cut in revenue will impact on payments for property rent, utilities and equipment rent until at least the summer, affecting suppliers, investors such as pension funds, and others who depend on the industry.

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