Authorities must support UK hospitality industry recovery

While public health restrictions affecting hospitality have eased in recent weeks, National Hospitality Day has arrived at a time when many restaurants, hotels, pubs and bars continue to operate at reduced capacity, with their recovery from lockdown being hampered by staff shortages and supply chain issues. Many premises have not reopened at all.

The pandemic continues to take its toll on the industry. High rates of Covid-19 transmission across the UK are resulting in staff absences and exacerbating a long-standing shortage of trained staff across the industry not helped by a tightening of immigration rules following Brexit.

New data published by the Office for National Statistics (ONS) shows that the hospitality’s sector vacancy rate is twice that of the UK economy as a whole, which UK Hospitality said was despite the sector creating 122,000 new jobs between March and June this year.

According to the ONS, in the accommodation and food service activities sector “labour demand has increased rapidly while staff availability fell because of a mix of employees leaving these sectors to find employment elsewhere and a reluctance of workers to return to their previous roles”. There are 5.9 vacancies per 100 employee jobs in the sector currently, the highest ratio reported across the UK economy, and some within the industry report a churn of staff to other sectors, such as online and delivery companies.

The practical impact of the vacancies is being felt. Wagamama chief executive, Thomas Heier, recently highlighted how a shortage of chefs shortage in particular is impacting his business. Heier reported difficulties in filling chef roles at 30 of Wagamama’s 147 sites. Celebrity chef Nick Nairn even told BBC Radio recently that, amidst a sympathetic outpouring from industry colleagues in light of a fire at his restaurant near Stirling, he had been inundated with enquiries about the availability of his chefs who worked at the establishment, which will take months to refurbish.

I can share further anecdotal evidence of the industry’s staff struggles from my own experiences in recent weeks. Some restaurants I visited in the north of Scotland reported having to restrict their opening hours due to lack of staff, while others were seeking to protect the staff they do have from burnout by offering no lunch time service or closing more days of the week.

Operating at reduced capacity has an impact on turnover and cash flow. One popular Glasgow restaurant, The Gannet, has stressed the “imperative” in generating cash flow “over the immediate future” and announced restrictions on its voucher bookings as a result. It said the measure is necessary “to survive the immediate crisis and continue trading”. The restaurant’s owner, Peter McKenna, recently told the Glasgow Times that The Gannet would operate at reduced capacity because of the staff shortage and, with mental health awareness clearly in mind, ensure existing staff “have a decent work life balance”.

Even where hospitality businesses have filled available roles, many of the new recruits are inexperienced and need training and more supervision. This requires time and resources. Further burdens on staff time apply in Scotland in particular, where requirements around ‘track and trace’ and mask wearing remain in place and entail additional monitoring for staff on top of their usual tasks.

The labour shortage in the sector is having a direct impact on the supply of goods too, which is already disrupted by other factors such as the lorry driver shortage and the lack of availability of container ships.

A collective of senior representatives from across the Scottish food and drink industry last month wrote to the UK home secretary and Scottish government looking for action to be taken to address the problem.

The signatories of the letter called on the UK government to “introduce a 12 month Covid recovery visa for the food and drink supply chain – to deal with immediate pressures on the industry and allow employers to expand recruitment to EU and other overseas workers” and to “waive the fees to employment visas for the food and drink supply chain until 2022”. They asked the Scottish government to automate funding programmes and help in promoting the industry as a career option.

One of the signatories of the letter, James Withers, chief executive of industry body Scotland Food & Drink, has provided a running commentary of “key issues” facing the sector in recent months. In a recent update, he warned that the labour and supply chain pressures could “worsen significantly as trade picks up in the run-up to Christmas”.

During the pandemic, some licensing restrictions have been eased to enable hospitality businesses to diversify their offering and operate viably within the restrictions.

In England and Wales, for instance, businesses with on-sales alcohol licences were granted temporary off-sale permissions to “make it easier for businesses to make use of outdoor space for dining and the sale of alcohol”. Similarly, temporary amendments were also made to the pavement licences process to help hospitality businesses make the most of outdoor areas on the street to accommodate customers during the pandemic. However, the temporary off-sale permissions are due to lapse on 30 September unless further regulations are introduced to extend the measure, while businesses are being encouraged to lodge fresh applications for pavement licences to benefit from the temporary relaxations in place until the end of September 2022.

The government also gave local authorities scope to apply derogations to licensing conditions in individual cases to support businesses through the pandemic, but there remains uncertainty over how long councils will continue to take a lenient approach for.

As the hospitality industry gears up for Christmas further challenges are likely to arise. Continued speculation over the reintroduction of public health restrictions, the end of the furlough scheme at the end of month, and, in Scotland at least, the imminent prospect of vaccine certification requirements for venue operators, only add difficulties to the ongoing labour shortage.

The UK government’s decision to again delay the introduction of new import controls for products coming into the UK from the EU to July 2022 offers some breathing space from further administrative trade barriers that could impact the industry, but further action would be welcome to support the sector in addressing the challenges it faces.

A re-examination of immigration rules is one step that industry is calling for, while a further easing of international travel restrictions would also help encourage the return of big-spending tourists from the Far East and US and reduce the industry’s reliance on a continuation of the ‘staycation’ trend.

Some within industry are taking their own steps to address the labour and supply issues they are facing. Hotel management company Interstate Hotels & Resorts has launched its own Chef Academy, offering new young apprentices a mix of on-the-job training and assessment-based learning. Other businesses are adapting rotas to minimise the impact on the wider team if one staff member tests positive for Covid, while the global supply chain pressures and climate agenda are encouraging local sourcing.

The government and local authorities should give further thought to whether licensing requirements could be further eased in the months ahead to support the sector through this challenging period.

With contributions from Hannah Burton and Kirsty Gallacher of Pinsent Masons.