Boris Johnson announced the one-off funding in the Commons on Tuesday, as he tried to win over Tory backbenchers who oppose his new three-tier regional system of Covid-19 restrictions in England.
According to the Federation of Small Businesses (FSB) the payment would only cover the cost of a keg of beer or 200 pints of lager at £5 per pint.
Mike Cherry, national chair of FSB, said in a statement: “Pubs are facing a dark and difficult winter ahead and ahead of new restrictions coming into force tomorrow, we need to see action if we are to save the nation’s pubs from collapse.
“But today’s announcement simply does not go far enough at resolving this problem for wet pubs. The proposed funds from the government hardly scratch the surface and we need to see this figure quadrupled at a bare minimum if it is going to have any genuine positive impact for the businesses affected.
“These funds would only cover the cost of a single keg of beer and very little more, which will come as little comfort to pubs who churn out multiple kegs a day during the festive period.
“Not only are pubs under the cosh, but suppler too who have seen orders cancelled and put on hold until normality resumes, which is why further support for these groups is needed urgently."
Trade body UKHospitality said the one-off payment did not “even count as a token gesture”.
Chief executive Kate Nicholls said: “Equivalent to just 1.1 per cent of last year’s takings, it falls far short of the bare minimum required to keep these businesses alive.”
She also criticised the current “farcical debate” around scotch eggs, which have been at the centre of attention after ministers appeared to be at odds over whether or not they count as a “substantial meal”.
Upcoming coronavirus guidelines for hospitality firms state that alcohol can only be sold alongside a substantial meal in venues under tier 2 restrictions.
Ms Nicholls added: “There needs to be a much clearer and supportive approach from the government and this means providing far more support immediately.
“The new tier system condemns nine out of 10 hospitality businesses to being unviable by the new year.
“The prime minister himself said that he was asking hospitality to bear a disproportionate burden to allow the reopening of all other parts of the economy and pay for our festive bubbles but the compensation is derisory.”
It doesn’t even pay for the Xmas decs in each bar we’ve already put up x
— Martin Wolstencroft (@wullybull) December 1, 2020
Jon Dalton, CEO of the Bloomsbury Leisure Group, which runs pubs that both do and do not serve food, told The Independent that the announcement was a "meaningless gesture from a government clueless about business”.
Simon Emend, the chief executive of brewers Fuller, Smith and Turner, told BBC Radio 4’s The World at One that the £1,000 offer “really doesn’t go any way to solving the financial armageddon” faced by the industry.
He said: “The challenge for wet-led pubs is if they don’t sell food they will find it impossible to operate, but you have still got bills to pay.
“They have still got to pay potentially rent, insurance costs, national insurance and the apprenticeship levy. That is far more than £1,000.”
The British Beer and Pub Association also weighed in, saying that on its own, the sum was “nowhere near enough to stave off thousands of pub closures” and called it a “meagre amount”.
Emma McClarkin, chief executive of the association, said the average pub will lose £47,000 in revenue this December.
“It is, quite frankly, an insult to thousands of pubs across the UK that are on their knees,” she said. “It barely touches the sides of what pubs up and down the country require to cover their costs and ensure they survive.”
The Treasury has been contacted for comment.