Adapt support or face enormous hospitality job cuts Government warned

By Nicholas Robinson contact

- Last updated on GMT

Adapt: industry urges Government to adapt support to save jobs in hospitality
Adapt: industry urges Government to adapt support to save jobs in hospitality

Related tags: Coronavirus, Legislation, ukhospitality, Kate nicholls, Parliament

Colossal job losses in hospitality can be expected if the Government does not adapt its current support package for the sector or even limit restrictions on the trade, it is feared.

That’s what members of this morning’s (6 October) virtual House of Commons Treasury Select Committee heard when asking about the state of the trade.

Parts of the hospitality sector had begun to break even and approach some form of financial normality, but this was now largely not the case,  UKHospitality chief executive Kate Nicholls told the Committee.

“There is a large chunk of the hospitality sector – one in five premises – that are restricted from reopening, that's large parts of the nighttime economy, as a result of legislation in the last couple of weeks,” said Nicholls.

The second wave of restrictions – the rule of six, table service and the 10pm curfew as well as local lockdowns – had not hit all parts of the economy equally and placed additional pressures on pubs, bars and restaurants.

“The new constraints and restrictions have put many businesses back from being viable and at a breakeven point to not being profitable,” said Nicholls, adding revenues in the sector, since the new restrictions, had dropped between a third and a half.

“We need to make sure we have sector specific support and nuances and evolve them,” Nicholls said when asked about the Chancellor’s winter support plan.

Not suitable for the trade

Rishi Sunak’s latest package of financial support, which included a scheme to help employees maintain ‘viable’ workers, was deemed unsuitable by many in the trade.

“We still have 900,000 hospitality workers on full furlough 400,000 on part-time,” continued Nicholls.

“We’re trying our best to bring as many workers back to retain that vital link between employer and employee and this scheme unfortunately doesn’t provide enough support for those sectors of the economy that are subjective to legislative restrictions and have an inability to earn a revenue at a normal level.

“We fear, unless there are amendments, you won’t avoid the cliff edge [of job losses]. We have a large number of redundancies forecast as a result of the way the scheme is set up.”

Many hospitality businesses won’t be able to tap into the new job retention scheme, which allows employers to benefit from Government financial support so long as employees can work several hours a week.

Recent Government restrictions and measures have seen many hospitality businesses’ revenues drop too low to bring staff out of furlough, despite previously seeing sales rising to at least break even.

In fact, in a recent poll of UKHospitality members, 91% said when the new job support scheme was announced it would not help them to retain jobs because of additional restrictions.

“The key here is what are viable businesses once demands and restrains are removed,” said Nicholls.

These are viable jobs

“In our sector, we would argue these are viable jobs. It’s only because you’ve got legislative constrains in the hours and capacity they’re able to open.

“When the demand was there, we employed people straight away and 200,000 extra people were brought off furlough with Eat Out To Help Out.”

The sector saw a large number of job losses at the start of the pandemic, mostly seasonal staff brought on for summer trade who could not be placed on furlough.

In total, hospitality employed 3.2m people are the end of last year, but that dropped by 500,000 at the start of the crisis.

Just 5% of the hospitality workforce has been lost since March, said Nicholls, who reiterated that 900,000 staff were still on furlough.

When asked about insolvencies in the sector, Nicholls said they had been minimal so far, but a survey of UKHospitality’s members predicted a quarter of those asked said they would be closing some of their sites.

Results from a previous poll, taken before the additional restrictions, also showed hospitality expected to make significant redundancies. However, said Nicholls, the results would likely be higher in a poll now. 

Related topics: Legislation

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