Alarm raised over local economy as businesses face ‘hard choices’

Three businesses at the heart of the local economy have provided an insight this week into the challenges faced by a wide range of sectors as the impact of the coronavirus crisis continues to unfold.

Despite being in widely different sectors, representatives from the Hackney Empire theatre, catering company Boulevard Events and co-working company Plexal at the Here East technology park all shared similar obstacles in discussion with councillors on Monday.

Jo Hemmant, the Empire’s executive director, has said that her well-loved theatre in Hackney Central has been exploring alternative business models, but nevertheless faced “hard choices” when the furlough scheme ends in October.

Hemmant, whose building closed on 15 March and receives only 12 per cent of its turnover through Arts Council funding, said: “This is an awful, terrible time for theatre. Theatre and the arts generally will be the last to come back. There’s no talk at all at the moment on how that might happen.

“Economically, social distancing would be very hard to contemplate. We don’t know how you would make a 1,200-seat theatre work with social distancing. If we could reopen, we would in an instant and make it work.

“We have spent the last two years stabilising the organisation, and we were just about to open the new financial year in the healthiest position that the Empire has been in for a long time. That is hard, but everyone’s been hit very hard.”

Hemmant added that the theatre is currently focusing on its creative futures and creative learning programmes for young people, which have shifted to online, adding that other solutions such as live-streaming and alternative uses for the space carried their own obstacles of respectively being hard to monetise and staffing costs.

Daniel Maher operates events company Boulevard, a second-generation family business that started as his parents’ restaurant in Victoria Park, and pointed to the cascade of effects on his own sector of a venue like the Empire not being able to open.

Maher said: “We would effectively be a supplier to Hackney Empire, so you can imagine that any challenges they face in terms of social distancing would trickle down to us.

“We began to see events cancel on us in the first week of March, so a good 10 days prior to lockdown. Our events can have up to 2,000 people, and obviously since lockdown we’ve had no events whatsoever. So that’s 100 per cent of our usual turnover disappeared.

“Global brands that are big clients of ours like Google have announced they will not be doing any events until May or June at the earliest next year. That’s a considerable amount of time, obviously, for us to be able to hang on.

“In the short term, financial support is going to be the biggest thing we need. The furlough scheme has been beneficial, but as soon as we have to contribute to any kind of wage support it will be very difficult even for a very small level, particularly as won’t be able to do events for the next few months.”

While 13 of Boulevard’s 15 staff are furloughed, it is difficult for the company to take advantage of any rate relief measures, which are paid out based on how premises are rated. Events companies such as Boulevard are not open to the public, with their events taking place on other sites.

The company has now put in place a local meal delivery service of pre-prepared meals which has brought back five per cent of its turnover, with Maher envisaging the events industry opening up only with effective same-day testing.

Andrew Roughan, managing director of co-working company Plexal, sister company to Here East, has underlined that both companies are “long-term businesses, committed to at least the decade that follows this”.

Around 60 per cent of businesses based at his sites have now had their costs deferred, with the universities based at Here East (Loughborough and Staffordshire) now shifting to remote working.

While Roughan remained confident about the future of Here East itself, he warned that the crisis was a “significant impact” for the businesses based at the Hackney Wick hub, with many having to consider “restructuring” as a result.

Roughan said: “We’ve got a large amount of jobs which are threatened, and lots of furloughing going on at the site. In consultation with lots of those businesses, we won’t see a material return until about September.

“Plexal, which is more of a reflection of small business in Hackney, has lost aboout 20 per cent of our customers either through administration or people terminating their contract with us as they become more prudent on their discretionary spend.

“It’s obviously not a fantastic time for Here East, but we’re long-term stakeholders in the regeneration promise that came off the back of 2012, and have absolute shareholder confidence despite some of the financial setbacks that we’ve got.”

The council has injected around £100m into the local economy in the form of distributed grants and relief, with its 350 commercial tenants covered for the first quarter of the year under its rent deferral programme.

While the government announced a top-up to its business grants scheme at the beginning of May, local economy chief Cllr Guy Nicholson “put a dampener” on expectations in conversation with businesses, pointing out that the £3.4m allocated by government to the borough would amount to around £485 for each of the 7,000 entitled businesses.

Nicholson said: “The issue is about the support that could be brought to bear through this period of time. There is rather conflicted messaging that is coming from central government at the moment and the responsibilities and onus are then placed on local government to manage these messages. There is clearly a great need to open our economy, and I don’t think anybody is ducking that one at all.

“Equally, we have this competing set of messages around social distancing, about public wellbeing, and the containment of a biological virus. We have to try and balance these two competing demands. On that basis, there is a real challenge for a council. On the one hand it is dealing with vulnerable and shielded residents and on the other hand bringing forward a phased reopening of our economy.

“We have a great challenge in front of us, and clearly the only way we can resolve it is by close collaboration between public and private, business and council.”

Find out how to support Hackney Empire here

You can order deliveries from Boulevard Events here

For more information on business in Hackney, head to investinhackney.org