On 14 September 2021, Health Secretary, Sajid Javid announced that the government could bring in extra measures in England, labelled as Plan B, which may be introduced to protect the NHS from unsustainable pressure of rising COVID-19 cases and deaths over the winter period.
The restriction listed under Plan B include:
- Public communicating that the level of risk has increased, with more cautious behaviour required
- Mandatory face coverings in certain settings
- Advice to work from home
- Introduction of mandatory COVID-19 passports
The government has stated that no single event or set of figures would necessarily trigger Plan B, but that it would regularly monitor hospitalisations, rapid rates of change in COVID-19 figures and the overall state of the NHS. If Plan B was to be introduced, these restrictions would likely be in place throughout the whole of winter until the end of March 2022.
The government’s internal Treasury impact assessment has warned that moving to Plan B would cost the UK economy between £11 billion and £18 billion by March 2022.
In the last week of October 2021, daily COVID-19 cases rose above 50,000 and Sajid Javid warned that they could hit 100,000 over the winter. Case numbers have since fallen slightly, although the seven-day average is still above 37,000 over the week through 15 November 2021. With uncertainty surrounding future COVID-19 case numbers, this article will assess the top five industries that are likely to be the most affected within the United Kingdom if the Plan B restrictions come to fruition.
Pubs & Bars
The Pubs and Bars industry would be significantly disrupted if Plan B measures were put in place as a result of the work from home guidance and mandatory COVID-19 passports checks.
Phil Urban, the CEO of Mitchells & Butler, owner of bar chain All Bar One, has stated that government ministers have left it too late to address the rising number of COVID-19 cases and that Plan B could devastate the industry. Furthermore, he noted that within the United Kingdom, consumers are already hesitant about visiting pubs and bars and that Plan B would put the all-important Christmas demand at risk.
During the height of the pandemic, profit in the Pubs and Bars industry declined from 9.9% of revenue in 2019-20 to 1.3% in 2020-21, as forced closures resulted significant increases rent, debt and wage costs relative to revenue.
With the industry currently in the recovery stage, it is evident that the damaging effects from the COVID-19 pandemic are far from over and that Plan B measures would mean pulling the rug out from under pub and bar operators.
Mandatory mask wearing is likely to be manageable for the industry; however, COVID-19 passport checks could result in a significant fall in pub and bar visits from consumers over the winter months and subsequently a fall in revenue. Currently contesting an uphill battle from the losses in the previous year, Plan B could seriously damage the Pubs and Bars industry.
Full-Service Restaurants
Much like the wider hospitality sector, full-service restaurants would be one of the industries worst affected by Plan B measures. This is because work from home guidance would ultimately lead to less customers, especially within city centres that rely on office workers. There is also a fear within the industry that COVID-19 passport checks could dampen demand due to the inconvenience and uncertainty that would trickle down to consumers.
According to UK Hospitality CEO, Kate Nicholls, hospitality operators such as restaurants typically generate 40% of their annual profit between Halloween and New Year’s Eve. This is owed to office parties, family lunches and New Year’s Eve celebrations.
The introduction of Plan B measures over the coming months would negatively affect demand for Full-Service Restaurants during the industry’s most crucial time period.
Simon Mitchell, CEO of business incubator and food market operator KERB, has warned that requesting people to work from home over the winter period would destroy restaurant businesses that operate in city or town centres across the country. This is because working from home would essentially mean no customers for these restaurants and would also eradicate office parties, which provide a notable amount of demand for restaurants.
In 2020-21, the inability of restaurants to operate at full capacity due to prevailing social distancing restrictions prevented any substantial revenue recovery from occurring once they were permitted to reopen following the nationwide lockdowns. IBISWorld estimations suggests that the Full-Service Restaurants industry’s revenue declined by 66.3% in 2020-21.
Nightclubs
Visits to nightclubs could be significantly affected amid the introduction of Plan B measures. The decision to introduce COVID-19 passports for entry to nightclubs would ultimately reduce the potential client pool for the industry. Vaccine passports have been mandatory in nightclubs and for large events in Scotland and Wales since 1 October 2021 and 11 October 2021 respectively.
The notion that the government would urgently communicate to the public that the level of risk has increased with the need to behave more cautiously under Plan B guidance is likely to deter some consumers from visiting nightclubs. This is because these are typically confined spaces and are very difficult to establish social distancing.
As a result, the increased fear of the virus and mandatory COVID-19 passports would damage the nightclubs industry through loss of client pool, which would subsequently affect revenue. Michael Kill, CEO of the Night Time Industries Association (NTIA), has warned that restrictions over the coming winter would be catastrophic for nightclubs.
The All-Party Parliamentary Groups survey reported that 63% of nightclub staff were made redundant over the four weeks through 7 February 2021, and 40% of nightclubs anticipated more redundancies between the time of asking and April 2021.
Additionally, government support offered during the pandemic had been deemed insufficient. For example, only 12 nightclubs have been awarded finance from the £1.57 billion Culture Recovery Fund, while an NTIA survey of over 100 nightclubs in February 2021 found that 43% had not received any grant support from the government. With the Nightclubs industry attempting to recover from these drastic damages brought about by the COVID-19 pandemic, it is clear that Plan B restrictions would dampen this.
Hotels
Remaining in line with the wider hospitality sector, demand for the Hotels industry would also be dampened by Plan B. Guidance to work from home could prompt cancellations of hotel bookings for work travel and office parties, which make use of hotels, and renew fear among consumers with regards to heightened COVID-19 restrictions.
Nonetheless, the general manager of the Royal Lancaster hotel in London, which has more than 400 rooms and hosts hundreds of events a year, has stated that booked events are still going ahead and they had not received queries about cancellations with regards to the potential Plan B measures. She also specified that the hotel lost about £9 million on cancelled events last year when COVID-19 restrictions were brought in for 2020 and bedroom occupation was still about half normal levels for the time of year.
With the hotels eager to have a restriction-free festive period, which they are often reliant on, Plan B measures could stand in their way and damage the Hotels industry over the coming months.
The industry also contested with falling revenue per available room (RevPAR), increased operating costs such as rent, wages and debt and sever labour shortages in 2020-21, which combined to result in significantly damaged revenue and falling profitability. If Plan B was to come to fruition, mandatory COVID-19 passports and work from home guidance could exacerbate the issue of labour shortages and falling RevPAR.
Urban Passenger Rail Operations
Urban passenger rail operators transport passengers by rail through urban, suburban or metropolitan areas, often underground.
During 2020-21, passenger numbers on Transport for London's urban passenger rail operations declined by more than 75%, contributing to a 74.3% decline in income generated from these services. This was partially caused by work from home guidance amid the national lockdowns of the United Kingdom.
Potential work from home guidance amid the government’s Plan B is likely to cause significant fall in people needing to use urban rail transport to commute to work.
Conclusion
It is evident that there will be vast economic consequences should the government’s Plan B come to fruition over the winter months through March 2022. While mandatory mask wearing should have little effect, it is the work from home directive, COVID-19 passport checks and general communication that the pandemic levels have risen that will do the most damage amid the Plan B regulations.
As a result of this, this article has shown that it is the hospitality sector, who have been damaged the most by previous nationwide lockdowns, that will be affected most by Plan B. Consequently, within the UK’s hospitality sector, there have been renewed efforts to secure continued government support as the reopening and rehabilitation process continues through what may be a challenging winter.
AlixPartners CGA Market Recovery Monitor showed that 980 hospitality sites in the United Kingdom closed between July 2021 and September 2021, despite the hospitality sector reopening in July 2021. These closures show that the hospitality sector continues to operate under severe pressure from the COVID-19 pandemic and is currently facing a range of operational challenges, including labour shortages, disruption to supply and rising costs.
As aforementioned, according to UK Hospitality CEO, Kate Nicholls, hospitality operators generate 40% of annual profit between Halloween and New Year’s Eve. With existing complications and dampened demand to the most crucial period, already bleeding pubs, bars, restaurants, nightclubs and hotels are likely to struggle if forced to contend with Plan B guidance.
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