Thousands of small B&Bs fear ruin after missing out on Government grant scheme

As the owner of a successful five-star rated luxury bed and breakfast in the North York Moors, Fiona Gardham never expected to be applying for Universal Credit. But as for countless others across the country, the coronavirus pandemic has changed everything.

Gardham, who runs the Eighteen97 B&B in the village of Goathland (most famous as the filming location for Heartbeat) with husband Tim, has found the process of applying for benefits difficult in every sense.

“Having never claimed any benefits in my life, where to start is quite baffling,” she says. “That is not the Government’s fault, it is the circumstances when half a million people are trying to apply for Universal Credit at the same time.

“I have tried to apply and got right to the last part of it after 45 minutes where you verify your identity but it just crashed three times. One of the applications must have worked as I got a phone call from the job centre in Whitby on Friday to say basically we have got to wait and see whether we will get anything.”

She says it has been a challenging experience. “It is a shock. Our sense of pride at being able to get through things and being self-sufficient is taken away. It is not a nice feeling.”

Over the last fortnight, Chancellor Rishi Sunak has announced a series of far-reaching measures worth hundreds of billions of pounds in an attempt to protect jobs and livelihoods – including one-off grants of £10,000 to small businesses and those in the hospitality sector.

However, the scheme currently only applies to those paying business rates – with many small bed and breakfasts left out of because they pay council tax instead as a result of the owners living in the same property.

Gardham says the other measures announced by the Government – such as paying self-employed workers 80 per cent of their profits from June – are “better than nothing” but will not ensure the survival of the business.

“In our personal circumstances, it will contribute something as we trade at a profit but it won’t cover our monthly outgoings,” she says.

“The £10,000 grant is the difference between surviving and not surviving and not only having a business but having a home as well.”

She says that she pays £2,800 in council tax per year – more than many other businesses which will qualify for the grant.

Gardham says that unless there is a rapid rule change on the grant scheme, there is a “massive question mark” over the future of the business.

“There is no way of knowing how long this is going to go on for. We have a little bit of savings but all those savings will go towards keeping the business afloat.

“Because we are so small it means that we don’t fit into a neat box so we have almost been left out to dry.”

She says she would be reluctant to take up the Government’s new loan scheme for businesses due to uncertainty about being able to pay back the money, while payment holidays announced for personal mortgage holders do not apply to the commercial mortgage they hold.

In a sign of how commonplace the situation is, another B&B just half a mile away from Eighteen97 is facing exactly the same problem.

Gill Craddock, who runs the Mill Croft B&B in Goathland with husband Dave, says: “We just want to be treated the same as everyone else.

“We bought Millcroft with a view to run it as a B&B and we were advised by a gentleman at the rates office it would be in our financial best interests to pay council tax as opposed to business rates. We would have been more than happy to pay business rates but followed the advice.

“All we are asking is that we are treated as fairly and equally as other businesses who run in the same way we do. We pay business insurance, we have a commercial mortgage and we should be treated the same as other businesses.

“I don’t know how long we can go on for. I have never been so frightened. I have emailed the rates people as instructed and they say we will get back to you within 20 working days. Well in that time I might not have a business or a home.

“I am sure there are an awful lot of bed and breakfasts that are in the same position. It is also likely to be affecting people running a business from part of their home like chiropractors and beauty therapists.”

Craddock says the announcement of support matching 80 per cent of profits for self-employed people is welcome but will not solve the business’s problems.

“It is going to be hard and I’m not sure we are going to survive this. We just seem to be the people who are forgotten about.

“At the moment we are living from day to day. I don’t know whether to throw the towel in now. My husband is a self-employed builder. The rates valuation office is shut because of coronavirus so you can’t speak to anybody there.

“Our home is our business. We have got a commercial mortgage, we pay business insurance. We haven’t had council tax relief because we run a business. Nobody could foresee this situation but I just feel we are losing out on absolutely everything.”

Craddock has set up an online petition urging the Government to give equal rights to small businesses paying council tax which has now been signed by over 1,000 people.

David Weston, chairman of the Bed & Breakfast Association, says the situation is commonplace and efforts are now taking place to ensure the Government grants do support B&Bs in this position.

“There is something like 35,000 B&Bs across the UK and we think a good proportion are in this position of not paying business rates but paying council tax. It is a fairly common arrangement. It is difficult to say precisely how many but we think it must be at least 5,000 to 10,000.

“Since the first package of measures were announced we have been pointing out to Government there is this gap. We have had indications back from the Department of Culture, Media and Sport that it is being looked at. We are pressing hard because a lot of people are desperate for help. I don’t think this situation was necessarily foreseen by the Treasury.

“I’m hoping that something will happen soon as people need certainty and they need the cash soon – their business has completely stopped. All of their bookings have gone for the next few weeks and months. They really need the cashflow.”

Tourism agency Welcome to Yorkshire has been advising affected businesses to contact local councils to explain their situation as some support may be available.

But James Mason, chief executive of tourism agency Welcome to Yorkshire’s chief executive, says that will not go far enough for many.

“We have heard disturbing stories from B&B owners who are desperately worried whether their businesses will survive or not.

“We acknowledge the efforts that Government has made in assisting businesses, the self-employed and individuals, but it appears that many B&B owners across this region could go to the wall if they are unable to access support.

“These people are paying thousands of pounds in council tax, contributing to local services, yet are now at risk. As a matter of urgency, I am asking the Chancellor to look at ways these businesses could be supported.”


Government ‘doing all it can’

The Government says it is doing “all we can” to support people through the coronavirus pandemic.

A Treasury spokesperson said: “The Chancellor has outlined an unprecedented package of measures to protect millions of people’s jobs and incomes as part of the national effort in response to the coronavirus.

“This includes protecting 80 per cent of the wages of furloughed workers and self-employed people for at least three months, introducing interest-free business loans, local authority Hardship Funds, VAT deferrals, mortgage holidays and covering the cost of statutory sick pay.

“We will continue to do all we can to support people, businesses, and charities to get through this challenging time.”

A Department of Culture, Media and Sport spokesperson said: “The government’s advice is clear that there should be no leisure travel until further notice. This will help us save lives and protect the NHS.

“We are regularly engaging with the industry to understand the impact of the coronavirus outbreak and to help the government develop appropriate responses. B&B owners can benefit from the government’s new Self-Employed Income Support Scheme which will provide essential financial support in these challenging times.”

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