The closure of non-essential businesses for almost 12 weeks of national lockdown has meant that many small businesses have either closed entirely or have developed new ways to trade. There is particular concern about the ‘double whammy’ for University towns, in which there is fear that reduced custom from both students and tourists amidst the pandemic may damage local economies. Varsity has spoken to local businesses about the effects of Covid-19 on retail in Cambridge. 

Brett Turner, Chairman of Cambridge Wine Merchants, explained that reduced numbers of “tourists and college and student trade” are a “terrible loss”. He added that the “loss of wholesale trade to restaurants and colleges is costing us several million a year, that hurts.” 

However, Turner is “not missing bulk/coach tourism, which is super-low spend [and] a net loss to the city.” It is suggested that many visitors to Cambridge arriving for day-trips by coach are ‘low-value visitors’ in that their time constraints mean that they do not contribute significantly to the local economy.

With regards to the absence of students, Turner said that the Wine Merchants, who usually cater May Week events across the city, had “sold off our May Ball stock very cheaply to retail customers.”

He then paid tribute to the “very strong loyalty in Cambridge” of regular customers to his business. He added that “home delivery is the new boom”, so the company have been “re-purposing our fleet of wholesale delivery vans and drivers.”

Turner has also developed creative adaptations to the lockdown, hosting a socially-distanced door-to-door wine tasting for his neighbours.

Varsity also spoke to Sefa Atay, Manager of Agora at the Copper Kettle, which heavily relies on student trade.

Atay was initially concerned by “the recent news regarding no lectures until summer 2021”. Following the news that Cambridge lectures would be online next year, many news outlets failed to account for the continuation of in-person supervision and small-scale teaching. While Atay has since been reassured by the University’s clarification that some teaching would be in person, he was concerned amidst the misreporting that the implication would be fewer students, which would have been “another nail in the coffin of many small businesses.”

His initial concern that the Copper Kettle would not have been able “to generate the income required to survive”, particularly because he expects “little to no tourism until at least mid 2021/2022,” demonstrates the extent of local businesses’ reliance on student trade. 

As part of the Chancellor’s 2020 Budget, it was announced that UK businesses with a rateable value of less than £51,000 would be eligible for a one-year tax holiday, in order to save businesses up to £25,000 in lieu of lost revenue. 

This policy may, however, be of little use to businesses in cities such as Cambridge, in which student and tourist trade can provide a relatively significant income throughout the year. Many businesses have an above-average rateable value higher than £51,000, so are therefore not being entitled to relief from this tax break.

Turner shared his thoughts on the rateable value cap, commenting that “thankfully our three Cambridge shops qualify for this relief”. He further shared that “Business Rates for our three Cambridge shops [...] normally total £1,000 a week, so the first £5,000 (inc. VAT) of turnover every week goes solely to pay this tax – that’s insane.”

Atay has been hit harder by the business rate cap, since their rateable value exceeds the £51,000 threshold. Atay said that “it’s a great shame that more work hasn’t been done to identify businesses in areas of the country that generally have higher rateable value.”

Commenting more generally on the struggles faced within the sector, Turner suggested that “the long-term burden for British retail is [...] that Business Rates are far too high, which contributes to the decline of town centres and loss of jobs.”

Concerns about the future of the British high street are not new. However, there are fears that the pandemic will accelerate the decline of in-person trading and purchasing.

At the end of April, the Government also introduced a Bounce Back Loan Scheme to aid small and medium-sized businesses rapidly requiring finance as the outbreak persists.

Both Turner and Atay somewhat support the scheme. Turner described it as “a good scheme” to which they are currently applying. Meanwhile, Atay proposed that “the bounce-back scheme is a great initiative that will benefit thousands of companies.”

Nonetheless, they also expressed concern, with Turner adding that the bounce-back scheme “is limited to £50,000, which isn’t much help to companies our size”.

Atay also commented that “it is of course still repayable, so in some sense it’s just consolidating debt, but the terms are at least favourable”.

Zeichner raised concerns about the impact of the pandemic for local businesses. In a virtual parliament session on 12th May, Zeichner told Alok Sharma, the Secretary of State for Business, Energy and Industrial Strategy, that around 300 of Cambridge’s local businesses are ineligible for the one-year tax holiday. 

Zeichner told Varsity that he believed the government had failed to respond to the issues he raised in his initial question to the Secretary of State. He added that “the problem has been that [...] they had to put a scheme in place quickly - but it couldn’t cater for all situations, and has left out cities with above-average rateable values like Cambridge and other places in the East and South East,” stating  “that’s difficult because they are just as vulnerable as anybody else”. 

He further described the pandemic’s effect on retail, in that “even with furloughing staff and so on, you can’t have your businesses shut for months and months and months, there are still overheads you have to meet, and depending upon their individual circumstances, some of them are not going to make it through.”

It is suggested that Cambridge’s £850 million tourism trade may not see visitor numbers returning to normal until 2023. 

When asked for his thoughts on reduced numbers of tourists, Zeichner responded that  “Cambridge is a much-visited city [...] where we’ve struggled to get high-value tourists who spend money in the city, we have an awful lot of day visitors and so this could actually be the opportunity to change the nature of people visiting Cambridge”. However, he warned that “one shouldn’t underestimate the impact it will have on a lot of city-centre businesses.”

However, Zeichner remains optimistic, proposing that “like most of these things, it [the pandemic] is a threat but also an opportunity, and that’s the key, to try and find a way of turning it into some advantage.” 

He added:“I’m not over-pessimistic, but equally I wouldn’t want to overplay it, because for some people it’s going to be really, really hard”.

The Department for Business, Energy and Industrial Strategy has since announced a Local Authority Discretionary Grant, in support of small and micro businesses who were not eligible for the initial Small Business Grant Scheme. Cambridge City Council launched its discretionary grant fund on Wednesday, with a total budget of £1.1m.

Non-essential businesses will be able to reopen from Monday, after 12 weeks of lockdown, if they are able to comply with Covid-19 safety requirements.