Article from The Sunday Times, Sunday, 16th August 2020
“A slow return to the office for the south coast resort’s financial services giants spells trouble for the local and national economies.
On a normal lunchtime, an army of office workers would descend on Jo and Guy Verney’s sandwich bar. Financial services professionals and creative types queue outside Sands2 in Bournemouth, waiting to get their hands on favourites such as chicken, bacon and avocado baguettes and chicken and chorizo wraps with melted cheddar cheese.
Unfortunately for the couple, both 49, there has been nothing resembling an ordinary lunchtime for months. With offices largely empty in the seaside town, weekly sales are down by more than 25%, and the Verneys, who have run the shop for 20 years, have had to make three of their seven staff redundant. In half an hour last Wednesday at lunchtime, just a handful of people came into Sands2. “I’m trying to remain optimistic,” said Jo. “But deep down, there is a real concern for the whole country.”
The pain the couple are experiencing is being felt across the rest of the town — and the UK. Office workers are staying at home, despite Boris Johnson’s entreaties. The delicate ecosystem of urban centres, in particular those such as the City of London and Canary Wharf in Docklands, is in danger of collapse as white-collar workers stay at home.
In recent years, Bournemouth has made its name as an unlikely financial services hotspot, especially for insurance and tech. Big employers include the American banking giant JP Morgan and Nationwide Building Society, plus insurers LV, Vitality and Health-on-Line, owned by Axa. Guarantor lender Amigo Loans was founded there. Barclays has a wealth management division in nearby Poole. The sector employs 8,000 in Bournemouth, about as many as tourism.
The arrival in 1986 of JP Morgan, lured away from a proposed hub in Swindon after council leaders wooed the Wall Street bank’s bosses with the promise of incentives for developing a big site, heralded a professional revolution in the town. It helped Bournemouth shrug off its reputation as a place for the elderly — and stag parties. According to census data analysed by the Centre for Towns, there were 45.7 pensioners for every 100 people of working age in Bournemouth in 1981, but that fell to 26.2 over the following three decades. Today, 18.1% of the population is aged over 65, according to the Office for National Statistics.
That influx of youth — including more than 22,000 at Bournemouth’s two universities, many of whom stay in the town after graduating — has also helped to create a tech and digital scene nicknamed Silicon Beach. The economy in Bournemouth, Poole and Christchurch is worth £12bn a year, with average weekly earnings of £498.79 putting it in the top half of urban centres.
Bournemouth provides a snapshot of post-lockdown Britain. While pictures of its crammed beach in June sparked outrage, the potential damage to the Dorset town from the slow return to office working is far more serious.
The Centre for Cities estimates that every office worker sustains an average of 1.7 jobs in other sectors — such as in bars and cafés — but pandemic-induced changes in behaviour mean that is shrivelling. “We are seeing the opposite now,” said Paul Swinney, the think tank’s research director. “Because these jobs are being done at home, people aren’t going out to spend money in those areas. That creates a big short-term challenge.”
As elsewhere, empty shops pock-mark Bournemouth’s retail quarter. Beales, the department store, closed its doors in March, and more than a dozen other shops on the high street are abandoned. Several, including a barber’s and a vaping store, have closed since lockdown, locals said.
Things look set to worsen the longer office workers stay away. Just 15% of staff at the big finance employers are in the office. JP Morgan is Bournemouth’s largest private-sector employer, with more than 4,000 at its operations and technology centre; only 20% of them were back in the office last week. Its two-metre social distancing rule — the most cautious interpretation of the guidance — has halved available desks, so the bank cannot get more than 50% of workers back on site for the foreseeable future.
Nationwide and Vitality have offices facing each other in the town centre. Of a combined Bournemouth workforce of 1,450, just 220 are regularly in the office. The car parks were virtually empty last week. Nationwide, which has a specialist lending operation in the town, said it would not change its arrangements before the end of the year.
The consequences are quickly becoming visible. Down the road from Vitality and Nationwide, two popular cafés have closed for good. Michael Delahaye, a barber at Bond’s hairdressers in the town centre, said his working day now consists of “a lot of sitting around”. Delahaye, 24, has worked at the shop for four years. He said that office workers were “our bread and butter”, but without them he is idle: “Either the missus is cutting their hair, or they are growing it out.” Near the railway station, dry-cleaner Ricky Kirwan, 28, said footfall was down by half as professionals did not bring in work clothes.
The absence of office workers could also have a severe impact on owners of commercial property such as Canada Life, which owns LV’s Bournemouth office. Should remote working take root, many employers will look to shed costly office space. Steve Carr, operational resilience director at LV, said it was “inevitable” that companies would look at their “estate strategy”. Just 34 of the insurer’s 864 Bournemouth staff are at its office.
The trend is not confined to big businesses. Andy Headington, founder of website developer Adido, gave up his lease at a town-centre office and struck a deal to share with the company on the floor above, as he does not expect his 15 staff to return full-time. If offices are emptied across the country, it could have a devastating effect on pension pots — fund managers are among the biggest owners of commercial property. Here in Dorset, it could impact the Meyrick family, which has assembled a £132m fortune by developing commercial, residential and leisure properties in Bournemouth.
Some say the commercial space could be repurposed into housing, as John Lewis is planning at some of the stores it is closing. “They will become residential communities,” said Paul Kinvig, chief operating officer of Bournemouth’s business improvement district. “But that throws up a load of planning issues for local authorities.” A scheme by Beales’s landlord to convert the store’s top four floors into 76 flats four years ago was quashed due to a lack of car parking.
Despite the gloom, there are reasons to be cheerful in Bournemouth. Maximillian De Kment, boss of local estate agencies Saxe Coburg and Lovett International, said house prices had ticked up by at least 10% thanks to a surge of Londoners wanting to move to the area. “We are not salesmen at the moment — we are just receptionists taking calls and doing viewings,” said De Kment, 54.
Kris Gumbrell, co-founder of pub chain Brewhouse & Kitchen, with 23 sites across the country and three in Bournemouth, said the hot weather meant that he was beating last year’s sales — although one shopkeeper complained that the beach was thronged with day-trippers bringing their own food and drink, starving local retailers of sales.
Hoteliers have capitalised on the heatwave and a staycation boom. Tim Seward, operations manager at the Holiday Inn and chairman of the local hospitality association, said the price of some rooms had doubled to £400 a night.
However, as autumn approaches and the beaches empty, Bournemouth could turn into a ghost town if office workers do not return to their desks. Seward, 42, said that, for the first time, some hotels plan to close for winter and make staff redundant before trying to reopen next spring.
Entrepreneurs such as the Verneys will hope for more bosses like Nathan Revill. The co-founder of software developer Dorset Creative has been encouraging his 12 staff back into its office across the road from Sands2, because they are able to do “so much more [in person] than we can on [Microsoft] Teams”. His team regularly buys sandwiches from Sands2 as Revill, 40, tries to help the local economy. “But we need to get more people back to their work environments,” he said.”
Find the entire article here: https://www.thetimes.co.uk/edition/business/storm-clouds-gather-over-bournemouth-the-city-by-the-seaside-n7vbpnpfc
It’s warm, it’s beautiful and it’s nearly the summer holidays! For many of you this would have been a very welcomed time of year and particularly after these last few months we’re all the more eager to get outdoors, visit some lovely beaches and parks and stay at a home away from home – Bournemouth, Christchurch and Poole are here waiting for you.
We have been working tirelessly, in collaboration with a number of partners, to ensure that your visit is a safe one. Tourism sector partners and businesses are preparing to welcome you, providing information about what you can expect from your stay and we urge everyone to Respect, Protect and Enjoy our destinations, in line with the latest Covid-19 Government guidelines. We have also prepared itineraries outlining the many things you can do and still remain safe.
When you visit, we want to ensure you feel as comfortable as you can, knowing you are in safe hands which is why we communiate the latest Covid regulations and guidance and are actively encouraging Visit Britain’s We’re Good to Go accreditation.This UK-wide industry standard and consumer mark aims to provide a ‘ring of confidence’ for tourism so that businesses can demonstrate they are adhering to the respective Government and public health guidance, have carried out a COVID-19 risk assessment and checked that they have the required processes in place.
A handy holidaymaker information sheet has been pulled together helping you to stay safe during your visit. Should you become poorly with suspected Covid-19 symptoms this guide will let you know what practical steps to take to keep you, your loved ones and others as safe as can be. There is also a useful Tourist Charter that we encourage all visitors to review before you set off on your journey so that you can ensure you are well enough to travel and can thoroughly enjoy your stay.
While you’re here, our colleagues over at Visit Dorset have launched a survey to measure consumer intention and sentiment. We’d be grateful if you could kindly complete the survey and thank you, on our partners’ behalf, in advance.Make sure you Know Before You Go: check out the dedicated pages on our Bournemouth, Christchurch and Poole websites providing details about how you can make the most of your visit and keep yourselves and your loved ones safe.
#RespectProtectEnjoy our resorts, and enjoy that well earned time and space during your summer holiday.
Bournemouth, Christchurch and Poole
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The LGA was very well attended and we were delighted to welcome the Leader of the Council, Cllr Vikki Slade and CEO Graham Farrant attendance.
Graham Farrant gave an update on the impact of COVID19 on the community, the economy and its resultant effect on BCP. As we know the amalgamated Council was created 1st April 2019 and whilst it has been in place for just over a year in time, they have still not completed a full year under ‘normal circumstance conditions’.
With a budget of £283million/year made up of council tax, 50% business rates, and some grant money, the authority has seen a loss of £50-53 million. (Affected by big losses from car parking, trading and more money spent on moving patients out of hospitals and into care homes earlier than necessary.) Graham highlighted that food distribution and shielding were left to Council and with children not attending school, many referrals and safety issues have arisen. However, the Councils relationship with Police and Health have improved over the past few months which benefits the community.
Graham went on to say that before he arrived in post, everything in the Council was paper based and that this has completely been reversed with everything ‘online’, significantly improving planning.
Vikki Slade discussed the Community Response, Business Grants and new Discretionary Grants scheme. The Council were able to very quickly pull together a community hub response called “Together We Can” with the intention that everyone who needed it, got support in terms of food, medicine, shelter etc. Council staff were redeployed to help with essential services and participated in creating a new environment together, as well as 2,000+ volunteers who were matched up with vulnerable people. BCP is now a leading council in the way it has worked during COVID19 and found new ways of communicating with the public, including weekly ‘FaceBook lives’. To date, 6000 businesses within BCP have received £75 million in grants.
Graham and Vikki continue to lobby government to look to accommodate those businesses that aren’t covered by the grants. The Discretionary Grants Scheme has a small budget which will not go far, with the Council allocating £0.3million to business that didn’t meet criteria but were deemed important to the local economy e.g. hospitality & tourism, nurseries, finance, health & social care. Currently, the Fund has had 502 applications, with 650 businesses anticipated to apply.
To view the interview, click below.
The UK economy has been met with the worst recession in history due to the outbreak of Coronavirus, with one of the hardest hit sectors being travel and hospitality. There has been a wealth of government resource which has had to be provided to businesses across the country, however none that are sector specific to date. Government announcements have been issued at rapid rates and re-opening dates for the industry remain uncertain, making it difficult for businesses to plan and budget.
Saffery Champness Partner Roger Wareham looks at five key issues that are particularly topical for the hospitality sector at present:
1. Social distancing – a new 1m rule?
The UK government has come under recent pressure from the hospitality sector to reduce the social distancing measures from two metres down to one. Whilst social distancing restrictions in any form negatively impact trade for most businesses within the sector, the reduction down to one metre could be the difference between around 75% of pubs and restaurants reopening and capacity increasing as much as 40%.
The official advice from the World Health Organisation is for people to stay at a minimum of one metre apart during the pandemic and this has seen countries such as France, China and Denmark implementing a one metre rule.
More than half of the Conservative cabinet have shown support for the reduction in distancing measures including business secretary, Alok Sharma, who stated that more than 3.5 million jobs in the hospitality sector would be at risk if the UK didn’t have a “lucrative summer”, hence calls for a one-off autumn bank holiday.
Boris Johnson has stated that the measures are “constantly under review” and we expect to hear more by 4 July 2020 – the earliest date expected for the re-opening of the sector per government legislation at the time of writing.
2. The furlough scheme and the hospitality sector
Changes to the government’s Coronavirus Job Retention Scheme (CJRS) have been welcome news for the hospitality sector, which has been one of the hardest hit sectors during the Coronavirus pandemic. It is estimated that only 11% of the sector has been able to operate normally since the crisis began.Rishi Sunak announced on 12 May that the CJRS would be extended from 30 June to 31 October 2020, with employers being allowed to bring furloughed staff back for part-time work as of 1 July 2020.
The government will continue to pay the lower of 80% of the wage bill or a cap of £2,500 a month until the end of July, after which employers will be required to begin making staged contributions towards these wages until 31 October, at which point the scheme will end.
Whilst this offers a short-term ease to cash flow for the country it is expected that, of the 8.4 million employees that have been furloughed since the start of the UK lockdown, one in three works in the hospitality sector.
The sector is one of the last to be able to re-open and with the current social distancing measures in place, full capacity cannot be reached for the majority of businesses. Trade bodies have expressed their concerns in light of the staged cessation of the scheme and have called out for other sector specific support measures to be implemented.
3. Rent standstill
At the start of lockdown, many businesses faced possible eviction over a lack of funds to keep paying their rent bills. Though the government announced that commercial tenants would be protected from eviction for a three-month period, ending 23 June 2020, the rent still remains due, unless otherwise agreed with property landlords. Furthermore, with the June rent quarter approaching at the same time, this could come as a final blow for many.
Trade body, UK Hospitality, has written to the Chancellor to warn that, unless financial support persists, then many businesses will face extinction, jobs will be lost and rent will not be paid.
Proposed schemes so far have included the introduction of tax credits to incentivise rent waivers, property bounce back bonds to cover lost revenue and a furloughed space grant scheme (FSGS).
The proposed FSGS would result in the government making tapered fixed property payments depending on the level of trade that the business is able to undertake. This would require an audited 24-month cash flow to be provided. A similar scheme has been seen in practice in Denmark.
A scheme such as this would however qualify as State Aid under EU law and so must pass onerous tests to be enabled. In addition, the government appears to have avoided providing sector-specific support during the crisis so far, instead urging landlords to obtain loans under the Business Interruption Loan Scheme. As such, it may be that the FSGS is not being considered an option at this stage.
4. Will the UK cut its VAT rates for the hospitality sector?
The UK is now one of the very few European countries not to have cut its VAT rates. Germany is due to reduce its VAT rate for the country as a whole (from 19% to 16% from 1 July to 31 December), and will also make reductions in its reduced rate, due to fall from 7% to 5%.
The UK has made similar changes in the past, notably during the 2008 recession, at which point it cut its standard VAT rate down from 17.5% to 15%. This was costly to the government and done in order to boost customer confidence. However, this reduction was not necessarily met with an overwhelming boost to the economy as hoped with many businesses struggling to pass the costs on to customers.
However, changes to VAT rates are quick and easy to administer and will provide an immediate ease to cash flow for the majority. It is a definite possibility that the government will cut the standard VAT rate to 15% (the lowest it can go while the UK is still governed by EU VAT law) in the near future.
5. Hidden Coronavirus costs and cashflow forecasting
Re-opening hospitality businesses is costly in itself. Not only will there be reduced capacity due to social distancing requirements, but there will also be financial investment required to make spaces safe for customers and staff (“social distancing ready”). These might include the cost of installing protective screens, providing additional staff, staff training and PPE, and sanitiser stations among many other potential costs. Footwear retailer, Kurt Geiger, has suggested that such measures could add an additional £75,000 per store to its costs for the year.
Whatever the level of preparation required, businesses will need to ensure their forecasts include any additional costs expected, as well as reductions to the furlough support scheme and the reintroduction of rent payments. Whilst there may be future hospitality-specific support measures introduced, we strongly recommend businesses forecast as prudently as possible to ensure that they are braced for recommencing trade