Labour: More than a million jobs in hospitality on the line as furlough cliff edge approaches

Labour is warning today that the jobs of more than a million people working in the hospitality industry are on the line and may be at risk if the Government refuses to extend the furlough scheme.

According to the latest official statistics, more than a million people working in the hospitality industry are still furloughed. The latest ONS ‘Business impact of Covid’ survey found that half of those working in hospitality are still on full or partial furlough, and almost one in 10 hospitality businesses are planning to make staff redundant in the next three months.

The furlough scheme is approaching a cliff edge in April and Labour has called on the Government to extend it to protect jobs as long as health restrictions remain in place and demand is severely affected. Labour is also calling for urgent reform to the scheme to make it smarter, with new training incentives to help furloughed workers improve their skills and tough conditions on employers to stop abuse.

According to government statistics, as of January 14 the industries with the highest number of employees still furloughed and most at risk if the Government refuses to extend the scheme are:

• Accommodation and food services – 1,036,600 people furloughed. A recent ONS survey also found half of those in the industry are still on furlough and one in ten hospitality businesses think they will have to make staff redundant in the next few months.
• Arts, entertainment and recreation - 273,800 people furloughed. The ONS found that almost 60 per cent of the industry is on furlough – the highest proportion.
• Wholesale and retail - 689,500 people furloughed
• Administrative and support services – 312,000 people furloughed
• Manufacturing - 270,200 people furloughed
• Scientific, professional and technical - 235,800 people furloughed

Labour is calling for an extension of the 100% business rates relief for retail, hospitality and leisure businesses for at least six months and for the government to follow the example of Labour-run Wales by capping relief so that support is targeted to those that need it most.

Labour is also calling for the reduced rate of VAT for the hospitality, leisure and cultural sectors to continue for another six months or until three months after the lifting of health restrictions – whichever is later.

The latest survey data shows almost 39 per cent of hospitality businesses are at severe or moderate risk of insolvency.

Lucy Powell MP, Labour’s Shadow Minister for Business and Consumers, said:

“Business owners want to protect their livelihoods and those of their employees, but they can’t plan in the dark and they’re crying out for certainty from the Government – on business rates, VAT and the furlough scheme.

“Boris Johnson and Rishi Sunak have presided over the worst economic crisis of any major economy. They need to back our businesses and support jobs as the vaccine is rolled out, to secure our economy and get Britain back on the road to recovery.

"It would be economic negligence for them to stand by and watch businesses go to the wall."

Ends

Notes to Editors

The latest statistics on the Coronavirus Job Retention Scheme include claims submitted to HMRC up to 14 January 2021. https://www.gov.uk/government/statistics/coronavirus-job-retention-scheme-statistics-january-2021/coronavirus-job-retention-scheme-statistics-january-2021#employments-furloughed-over-time-by-industry

The latest ONS Business Impact of Covid survey is from 11 February 2021. https://www.ons.gov.uk/economy/economicoutputandproductivity/output/datasets/businessinsightsandimpactontheukeconomy

• 11.6% of accommodation and food services businesses surveyed said they are at ‘severe’ risk of insolvency and 27.2% of accommodation and food services businesses said they are at ‘moderate’ risk of insolvency.
• 50.8% of accommodation and food services employees were on partial or furlough leave. Only 8.3% are expected to return to work from furlough in the next two weeks.
• 58.8% of arts, entertainment and recreation employees were on partial or furlough leave. Only 3.1% are expected to return to work from furlough in the next two weeks.
• 8.8% of accommodation and food services businesses expect to make staff redundant in the next three months, with 29.9% not sure if they will make staff redundant.

Seven months after the Chancellor launched his Plan for Jobs last July, redundancies are at record highs and 1.7 million people are out of work. The latest ONS Labour Market Data shows that 1.7m people were unemployed in September to November 2020. https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/january2021#employment-unemployment-and-economic-inactivity

Labour’s Business rates relies plan

• The Welsh Labour Government has consistently offered more generous support for businesses by adopting a more targeted and responsible approach than the Chancellor.
• The UK government should learn from the Labour Government in Wales and make the rates relief targeted by introducing a cap for essential retail businesses above a certain size, with the cap appropriately calibrated for England.
• The Welsh Government applied a cap so that retail, hospitality and leisure businesses with properties with a rateable value of more than £500,000 were not eligible for the relief. By making this change, the Welsh Government freed up an additional £100 million to kickstart its Economic Resilience Fund, enabling grants to 2,000 SMEs. https://gov.wales/written-statement-response-covid-19-economic-crisis
• By contrast, in England large supermarkets and other stores that have not suffered from a fall in demand during the crisis have handed back the money they had saved from rates relief to the Exchequer, amounting to around £2 billion. https://www.theguardian.com/business/2020/dec/03/sainsburys-hands-back-440m-in-covid-business-rates-relief