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Down here in the bay...

Down here in the bay...

Thursday 23 April 2020

Down here in the bay...


The virus crisis has forced the once thriving hospitality industry "to swim with concrete boots on, and only a child's life jacket to help", according to the owner of El Tico.

In this column for Express, Andrew Hosegood shares his thoughts on the pandemic and the government's response to it...

"Covid-19, and that chilling expression 'social distancing', have brought a vibrant, thriving, local hospitality industry to its knees in a matter of weeks.

Clearly it is causing an awful lot of distress around the world, but as I write this, thankfully the local health impact appears to be far below forecast. We appear to have flattened the curve, and our hospital is at 32% occupancy. The economic price for that outcome is, as yet, unknown.

It goes without saying that we should not put a value on the health of our community, but unfortunately, in many ways, we will eventually have to. We all understand that there is a small risk in flying, but we do so because of the economic and social benefits. The same applies to our use of cars or motorbikes, because whilst tens of thousands are killed, or seriously injured, on the road every year, we accept the risk because of the economic benefit.

Rightly or wrongly, the government decided that the elevated risk of infection was too great, and shut down our economies and enforced social distancing (I can't tell you how much that expression chills me). The social and economic consequences are unfolding in front of us.

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Pictured: Andrew Hosegood, owner of El Tico Beach Cantina 

With the pandemic raging around the globe, and news channels filled with stories of personal loss, it might appear distasteful to be discussing economics, or the massive generational financial damage being caused by effectively closing our economy.

Only last week, a local Deputy tweeted that "now is not the time to discuss the economy...". That’s fine coming from the perspective of somebody with the security of a monthly States member’s salary. One has to question, had he been a small business owner whose staff faced an uncertain future, whose income had been destroyed, and who had creditors circling, whether his compassion would have been so over-whelming?  

There are of course huge numbers of people working not just in vital health and medical services, but in food retail and distribution, the emergency services, and myriad other areas who fully deserve our grateful support and thanks. But there are also those who through no fault of their own are staring at the prospect of permanently closed businesses, and the very real loss of all they have worked for.

It is absolutely the time to work out what we do to fix this economic mess. We need a plan, and we need it fast because the very businesses and employees who pay the taxes to fund the care and compassion that this terrible virus demands may no longer be around in the future.

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Pictured: "Down here in St Ouen's bay, previously vibrant businesses are ghostly quiet."

Down in St Ouen's bay, previously vibrant businesses are ghostly quiet. The Easter weekend was sunny and warm and would have meant a dream start to everybody’s season, but the various kitchens were closed, staff locked down, and sunny terraces deserted, in order to comply with the dreaded "social distancing".

From a personal perspective, it has been brutal, frightening, and shattering to close a successful business and deal with the financial and emotional consequences of doing so. My own businesses are incredibly lucky. We have a fantastic team who have all contributed to building a successful business, that is financially strong. We will survive this, but the hospitality industry is being torn apart on our watch, and Government needs to do more to make sure there are viable businesses left after this nightmare has passed.

We have been unbelievably blessed at El Tico with the support we have seen from the community since we took over the restaurant. We have a fantastic team who have all contributed to building a successful business. We will hopefully survive this, but the broader hospitality industry is being torn apart as we speak, and Government needs to do more to make sure there are viable businesses left after this nightmare has passed.

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Pictured: "Kitchens were closed, staff locked down, and sunny terraces deserted."

What we, and most other businesses, are facing is not an operational problem, but  a liquidity challenge. Businesses fail for two very simple reasons, they are either badly run, or are in the wrong market. We have a lot of very well run restaurants, cafes, pubs and hotels, that are in the right market and have amazing teams who make sure their operations are properly run. They pay their bills, they invest in their staff, and understand the principle of working capital. They haven't done anything wrong, but somehow, as an industry, we find ourselves in the fight of our commercial lives for survival.

There is a lot of talk about community, about how we are all in this together, but are we really ? Some businesses, having found themselves in the right market at the right time, may even thrive in this environment. A lot of employees will continue to be paid in full while "working" from home. Many in the private sector will also gaze wistfully at those in public sector, who, despite the financial constraints the government are facing, will continue to enjoy the security of regular salaries and gold plated pensions.

From the brutal front line of a closed private sector business, it’s easy to feel like we are not in this together. Yes, the Government has tried, putting in place the 80% wage support scheme, but it's not nearly enough, and actually nets out, after ITIS and Social Security deductions/contributions (which are, ironically,  returned to the Government), at approximately £58 support for every £100 paid by the employer. I'm even more confused and disappointed by the latest amendments to phase two, with the "optional" 20% contribution by the employer depending on whether they can afford it. Really? If you want us to survive, you will need to do more, much more.

Additionally, there is a huge cash flow issue in funding 5 to 6 weeks payroll before receiving any payment from the government, as well as meeting all the other overheads that need to be paid whilst we are not earning a penny. Government advises us to borrow, and those fortunate enough to previously have run debt free businesses will be able to survive this by doing so, but it is not a panacea for many, and feels like somewhat like one is being punished for having acted professionally in the past.  .

I mentioned to a senior minister that for many businesses, this doesn’t feel fair, and got my ear chewed off in response, however if we truly are a community, and all in this together, as Government, they have a responsibility to do more if they want a viable economy once this all ends.

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