Over 650,000 hospitality jobs lost in past year, with thousands more at risk

14 January 2021 by
Over 650,000 hospitality jobs lost in past year, with thousands more at risk

The hospitality sector has seen an estimated 650,000 job losses in the past year with a campaign group warning thousands more could be cut if the reduction in VAT is not extended past March.

Analysis of over 700 restaurant, pub, bar and QSR (fast food) companies by hospitality software provider Fourth found the number of industry jobs has fallen by a quarter compared to January 2020.

Hotels were the worst hit, reporting a 31% reduction in workforce compared to restaurants (28%), QSRs (26%) and pubs (21%).

An estimated 9,845 hospitality workers lost their jobs in November during England's national lockdown. But Fourth said this was the slowest decline in numbers since June, suggesting the extension of the furlough scheme until March was protecting some staff roles.

A separate study warns a further 310,000 industry jobs could be lost if the cut to VAT is not extended.

The report is based on a survey of 1,144 hospitality and tourism businesses carried out by the Cut Tourism VAT (CTV) campaign, UKHospitality, the Tourism Alliance and the Association of Leading Visitor Attractions.

Chancellor Rishi Sunak slashed VAT on food, accommodation and attractions from 20% to 5% last July in a bid to help struggling businesses.

The reduction is also due to end in March, which CTV warns could force companies to reduce their numbers of staff.

Kate Nicholls, chief executive of UKHospitality, said the reduction in VAT had been "one of the few bright spots" of the year.

She added: "If the government wants to see a turbo-charged recovery in communities right across the UK then an extension go the VAT cut is the surest way to do it – creating jobs, investment in our high streets and helping customers get a cheaper hospitality experience."

More than 75% of businesses surveyed said they might have been unable to keep trading without the reduction in VAT, with the majority using it to meet the costs of additional Covid compliance and pay wages and suppliers.

Just over 70% of businesses said if VAT remained at 5% they would be able to use savings to fund further investment.

Kurt Janson, director of the Tourism Alliance, said: "The temporary reduction in VAT for the tourism and hospitality industry has been vital in protecting businesses, suppliers and employment, so returning to a 20% rate would undo all that good work. We believe that there is also a huge benefit in combining a reduction in VAT for the tourism and hospitality industry with a reduction in the VAT threshold for businesses."

CTV's estimates on job losses were based on data compiled by the Office for National Statistics and UKHospitality.

Image: Shutterstock

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