COVID-19: Support for the hospitality industry, House of Commons, 24 March 2021

Throughout the pandemic, councils have provided a lifeline to struggling hospitality businesses by distributing more than £11 billion to 880,000 small businesses in 2020. As the government implements the road map to re-opening, councils will continue helping businesses to re-open safely.

Key messages

  • As leaders of place, councils play a key role in shaping local economies and ensuring hospitality businesses are supported. The hospitality sector in each town, city and area faces different conditions and different challenges. A locally led, place based approach to reopening and recovery will ensure the smoothest and most cost-effective return to normal life.
  • Throughout the pandemic, councils have provided a lifeline to struggling hospitality businesses by distributing more than £11 billion to 880,000 small businesses in 2020. As the government implements the road map to re-opening, councils will continue helping businesses to re-open safely.
  • Councils are now working to deliver the remaining £1.6 billion in Additional Restrictions Grants to businesses as quickly as possible, and recent clarifications of the guidance to include coach and tour operators are welcome. We welcome the flexible nature of the £56 million announced in the Welcome Back Fund, which will allow councils to target specific improvements, including the improvement of outdoor spaces, to help areas get back on their feet in a safe and managed way.
  • In order to contribute most effectively, councils need earlier involvement in decisions at a strategic level, including the tourism recovery plan, which will be heavily dependent for delivery on council services such as destination marketing, business support, planning and licensing, and a seat on longer term bodies like the Tourism Industry Council.
  • We are calling for the acceleration and expansion of place-based initiatives such as the Cultural Compacts and the Tourism Zones first announced in the Tourism Sector Deal. Combined with the funding made available through the Levelling Up Fund, Towns Fund and, in future, the UK Shared Prosperity Fund, these should turbo charge the economic recovery of local areas and the hospitality sector in particular.

Place based leadership and local economies

Placed based leadership will be critical to successful local economic recovery. Local government supports the hospitality sector through shaping local economies and attracting business through regeneration, inward investment and developing visitor economies.

Councils support hospitality businesses directly through business support services, regulatory and licensing services, planning and transport. Local government also provides a range of other bespoke solutions to support businesses including skills academies, supporting wifi rollouts and providing high street marshalls during the pandemic to keep town centres safe.

The culture and leisure sectors play a critical role in supporting the hospitality sector and the night time economy through driving footfall to high streets and attracting visitors to town and city centres, and other destinations. Hospitality businesses have been clear that the closure of key attractions like theatres, museums and sports stadiums have had a significant impact on their own businesses, and restoring these experiential offerings is crucial to supporting the hospitality sector. Our research into the impact of Covid on these sectors, and councils’ work with them, revealed significant challenges for councils in supporting this activity if their budgets continue to be under pressure.

Councils play a key role in funding and delivering services in the culture sectors and visitor economies. Councils are direct providers of visitor and tourist attractions, including castles, historic buildings, parks, piers and amusement parks, and they act as destination management organisations. They run over 350 museums, public archives, over 116 regional theatres and galleries, and are responsible for many monuments. Councils are the largest public investor in cultural activity, spending over £1.1 billion each year on cultural services and suppliers. Councils’ contribution to regional visitor economies is particularly significant, with many of our regional airports being directly or indirectly owned and managed by councils. These critical transport hubs are essential to ensuring all parts of the country benefit from the visitor economy.  

Local government should be involved in the national conversation on the visitor economy and the recovery of hospitality and other industries it supports, given their unique position as direct deliverers of attractions, key transport infrastructure, funders, and as curators of place. Local government should also have representation on the Tourism Industry Council chaired by the Minister of Tourism to allow them to maximise their contribution to the economic recovery, and effectively manage their own key tourism businesses.  

Culture-led regeneration

Councils have been at the forefront of successfully developing leisure and cultural activities to stimulate inclusive and sustainable economic growth, as we explored in our reports on culture-led regeneration and supporting local creative economies. Using these approaches, Manchester’s International Festival generated £40 million for the local area; Portsmouth’s Historic Royal Dockyard and council-planned Gunwharf shopping area attracted two million visitors and generated £51 million for the economy, and the Newcastle/Gateshead initiative secured or created 1, 300 jobs.

Culture and leisure organisations, including theatres, live music venues, galleries and museums, have been proven to act as ‘anchor’ institutions, driving footfall into towns and city centres; generating jobs and investment, and supporting the rejuvenation of industries in their economic eco-system, such as hospitality, retail, public transport and taxis. 

To support local economic recovery of hospitality and co-dependent sectors, we are calling for:

  • Councils to be supported by Arts Council England to develop more cultural compacts to drive local economic growth. In 2019, Arts Council England and the Department for Culture Digital Media and Sport (DCMS) funded the creation of cultural compacts in 20 areas, which established formal, goal-driven partnerships between councils, local cultural sectors and wider stakeholders to co-design future cultural offers and deliver prosperity through cultural investment. The review of compact pilot initiative found that this approach has delivered for local economies.
  • The expansion of Tourism Zones in numbers and scope, with appropriately scaled funding levels, brought forward as soon as possible. This should include innovative options for raising finance, building on proposals from the Cultural Cities Enquiry, the option of a tourism levy, and business improvement districts.  

Local government case studies

Derbyshire County Council: The council has provided support to over 2000 small businesses through DCC Business Hardship Fund; collaborated with districts on grant discretionary grant schemes to target visitor economy businesses; funded an online retail platform for businesses to help those without an existing online offer to stay open virtually during lockdown (; employed specialist staff to support the tourism sector with a further five Business Advisors to be recruited; established a Landlord Commission to look at constraints and opportunities for businesses including consideration of progressive lease terms to encourage risk sharing and investment; developed a wifi town centres initiative to support business resilience, and established the Green Entrepreneurs Fund to build back better and more sustainably. A complete outline of their work can be found in their presentation to the LGA’s annual tourism conference 2021.

Watford Borough Council: The council set up a Business Recovery and Growth fund, helping nearly 300 businesses in the town with free advice and skills training to help them through the challenging lockdown period. The council also teamed up with tech giant WhatsApp to create the UK’s first WhatsApp High Street, making use of the WhatsApp Business App to enable businesses to communicate with customers in a new and innovative way.

Lichfield District Council: The council launched a ‘#LoveLocal’ campaign, encouraging residents to return to their local high streets, providing a high profile campaign across the council area and materials for local businesses. They also had a dedicated information officer to provide 1:1 safety advice to local businesses about how to reopen in a COVID-secure manner.

London Borough of Newham: The council is working to create new ‘15 minute neighbourhoods’, with changes to street scape and more pedestrian friendly areas, encouraging greater social distancing and more people to walk and cycle to their local high streets.

Further reading