‘Wet pubs’ dilemma highlights wider quandary facing Government

Pub lobbyists should find out today if their campaign to win Government agreement for a reopening of so-called wet pubs has been successful. Representatives of the wider hospitality sector, meanwhile, have a fine line to walk in the run-up to the upcoming budget between calling for State help and managing the message that many businesses may go bust in the depths of winter.

There is widespread belief in the hospitality trade that early January will herald a wave of insolvencies in the sector. Many pubs, restaurants and other businesses that have struggled during the pandemic are said to be planning to limp on until Christmas. But as soon that traditionally busy season is over, many in the sector are warning, a lot of operators will go under.

This leaves the Government in a delicate quandary as it ponders how to stretch the pool of taxpayers’ cash in next month’s budget to prop up all corners of the economy that are calling for State support.

Hospitality lobbyists have repeatedly warned that businesses need to be provided with grants or direct cash transfers, as many will be unable to generate the surplus cash flow to repay loans.

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But if many of them are in danger of going bust anyway, it is reasonable to ask whether this is the best use of taxpayers’ resources. Some of the cash may end up simply defraying debts owed to creditors in an insolvency situation, such as landlords and banks. Care will be required when giving out grants.

The Government must continue to balance the twin priorities of protecting public health and allowing the economy to function as normally as possible during a pandemic.

Provided the virus can be contained, the more it tilts the balance towards allowing businesses to trade, the less it will have to give them in grants and the more likely that the cash will not simply be flushed down an insolvency plughole.