Questions over billionaire-backed hotels using £4m government furlough cash

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jim ratcliffe furlough
Sir Jim Ratcliffe is the fifth richest Briton

QUESTIONS have been raised after it emerged a Lyndhurst boutique hotel chain backed by multi-billionaire Sir Jim Ratcliffe has furloughed staff using more than £4m worth of taxpayers’ money.

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Hundreds of workers for Home Grown Hotels and Lime Wood Group are being helped through the government’s Business Interruption Loan Scheme (BILS) – leading some MPs to ask if that is appropriate given Sir Jim is among the group’s known investors.

This comes in the wake of the latest Sunday Times richlist which estimated Sir Jim, who has owns a waterfront mansion in Beaulieu and is founder and chairman of petrochemical giant Ineos, to be worth £12.1bn. It makes him the fifth richest Briton.

However, the ranking was two spots down on his 2019 listing, with the decline blamed on Ineos debts and the ongoing coronavirus pandemic.

The Pig Hotels and Lime Wood group is based in Lyndhurst. Among the group’s portfolio is the village’s luxury five-star Lime Wood Hotel and The Pig in Brockenhurst.

Asked to comment, a Lime Wood Hotel a spokeswoman pointed to a letter written by chairman of the hotel group, Robin Hutson.

Addressed to Prime Minister Boris Johnson, Mr Hutson said the group had taken advantage of the government’s help to furlough 782 staff, worth £4m in assistance.

Signed by a host of other notable people in the hospitality industry – including former Dire Straits bassist John Illsely, who owns the East End Arms in Boldre – the letter called on the government to give more support to the ailing hospitality industry, adding reopening during 2020 looked “unlikely”.

It also said furlough payments should be backdated to March this year and not just for those RTI registered, the business rates holiday extended, VAT for hospitality businesses reduced and a further extension of time given for repayment of deferred VAT/PAYE.

“Hospitality is a labour-intensive industry with high fixed costs and, despite its success, operates with slim profit margins,” the letter said. “Many rural businesses live from hand to mouth, from season to season, with little or no cash reserves.

The Pig, Brockenhurst

“In the past few years the sector has been bombarded by an assault on these already slim margins. High rent rises, increased food and beverage costs, hikes in business rates, utilities, insurance and the new National Living Wage. For most of us, break-even occurs at 70%-plus occupancy.

“It is against this background and recognising the critical importance of hospitality to rural communities I wish to highlight the unique sensitivity of reopening these businesses post-lockdown.”

The letter went on: “Critically, it is the negative financial consequence of the increased spacing/restricted trade that causes the greatest concern. Spacing rules will undoubtedly push many rural businesses below their break-even point,” the letter added.

“The worst possible scenario for rural hospitality, would be the ‘perfect storm’ of furlough ceasing, hospitality opening up, but social distancing rules imposed.

“This toxic recipe would immediately translate to mass redundancies and the permanent loss of hundreds of thousands of rural jobs. This would be economically and socially devastating for rural Britain.”

It highlighted the group had invested close to £100m in rural Britain developing its hotels and created around 800 permanent jobs in the process, thanking the government for its help.

Asked about furloughing, a spokesman for Ineos said it had not furloughed any of the 3,000 staff who work at its UK chemicals sites.

“We have worked hard to keep our people safe to keep plants running that produce vital raw materials used in the fight against Covid-19.

“Our products go into the production of paracetamol, anti-inflammatories, anti-virals, aspirin and the reagent chemicals that go into testing kits. In addition to the plastics needed in medical equipment, face masks, ventilators, sterile gloves and eye visors.”

He pointed out Ineos had built a new plant in Middlesbrough manufacturing medical-grade hand sanitiser, which had been operational for a month.

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