Businesses warned not to hike prices to make up for lost revenue ahead of reopening

Businesses reopening for the first time in months next week have been warned not to hike their prices – because they have already received billions in taxpayer-funded support.

Pubs, restaurants and hair salons are among the venues allowed to welcome back customers from July 4, albeit under new Covid-secure rules, which is likely to mean significantly fewer people allowed inside than before the coronavirus outbreak.

As a result, there have been suggestions that businesses could start charging more in a bid to stay afloat, particularly with some trades incurring other costs such as those involved in supplying staff with PPE.

A quarter of restaurants, for example, intend to increase prices to make up for lost revenue, a poll seen by the Telegraph suggests, while one London hairdresser hiked the cost of a standard cut from £30 before the crisis to £55 for bookings ahead of its reopening.

This way to pay for extra precautions, according to The National Hair and Beauty Federation. 

Meanwhile, Tom Stainer, chief executive of the Campaign for Real Ale, said pubs were looking at hiring door staff and ‘greeters’ to police queues and ensure social distances are maintained inside the premises.

He added: ‘At a time when pub revenues are down because there are fewer customers and costs have gone up, it might be that pubs can only make it work by raising prices. I would hope pubs can avoid this or only raise prices a little, but we understand they may have to, just to remain viable.’ 

Elsewhere, retailers have said shortages in supplying DIY goods, homeware and cookware has led to price inflation in recent weeks.

However, government bosses will be keeping an eye on any ‘price gouging’ where customers are charged more for items than is considered reasonable or fair, which saw some traders prosecuted at the start of the pandemic. 

Business minister Nadhim Zahawi said: ‘We have said we will monitor any bad behaviour in terms of price gouging and we will keep a very close eye on that and take action. That is not something businesses should be contemplating. We will stamp it out.

‘If pubs or salons put their prices up consumers will vote with their feet. We have given over £10billion in grants to small businesses and £28billion in the bounce back loan scheme, so there has been a lot of support from the taxpayer. 

‘There is also the VAT deferral, the business rates holiday, so the taxpayer has given them enormous support.’ 

It comes as ministers will today unveil plans to turn streets into outdoor markets and allow pubs to use car parks as beer gardens.

New laws being published today will loosen restrictions on drinking, dining and shopping outdoors – where the risk of transmission is regarded as much lower.

The Business and Planning Bill, which should be fastracked through Parliament in time for lockdown easing on July 4, will make it easier for local authorities to pedestrianise streets to help struggling businesses.

A government source said: ‘People talk about the cafe culture on the Continent and we want to recreate something like that here this summer – you could call it al fresco Britain.

‘It obviously depends on everyone adopting a can-do attitude to try and save the summer, but we are going to play our part by cutting red tape and getting out of the way of business.

‘You could see closed-off streets laid out with tables and chairs for dining. We are removing the need for planning permission for outdoor markets, so you could see small shops and boutiques which are struggling with social distancing setting up market stalls.’

The move is designed to counter criticism that guidance for indoor hospitality and retail is too onerous and off-putting to customers.