UK hospitality industry says 500,000 jobs are at risk

British government's furlough scheme is set to end

A waiter serving diners. Getty

The UK hospitality industry said it could lose 500,000 jobs when the government’s furlough programme to support wages ends.

Hotels, restaurants and bars will have back taxes of £93 million ($132m), which will become unsustainable if the government does not end all lockdown rules as planned on June 21, said Kate Nicholls, of business lobby group UK Hospitality.

Her remarks to the Treasury committee in the House of Commons on Monday show the strain on businesses from Covid-19 rules that closed vast sections of the economy for more than a year.

With the Delta variant of the virus, first identified in India, spreading fast in the UK, the government has raised doubts over when it can allow a full reopening.

“All it takes is one landlord to be recalcitrant and to not concede or not negotiate, and it could be enough to trigger insolvency across the whole of the estate,” Ms Nicholls said.

She said the industry was suffering labour shortages that would worsen if the full reopening occurred on time.

That is partly because workers from the EU left Britain for their home countries during the crisis and could have difficulty returning because of visa rules after Brexit.

It is also because many migrant workers cannot return to the UK because of travel restrictions, and as students have moved out of towns and cities.

Ms Nicholls said an emergency coronavirus recovery visa, as introduced in Australia, could help to attract migrant workers back to Britain.

Many businesses could not afford to put seasonal staff on furlough, meaning they are competing for recruits.

For skilled chefs and managers, in some parts of the country, this is leading to wage inflation, Ms Nicholls said.

She said government loan programs were helpful, but commercial landlords remained wary of renting to hospitality companies because of the risk of lockdown rules.

Many companies are operating at a loss because of the cost of delivering table service as required under government rules.

The industry owes landlords £3.6 billion, which will leave an impact like “long Covid for the economy".