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Around one million hospitality jobs at risk of redundancy if furlough is not extended

15 September 2020 by

Around one million hospitality workers are at risk of redundancy if the furlough scheme is not extended beyond 31 October, trade body UKHospitality has warned.

It comes as Labour leader Keir Starmer warned failure to replace the scheme with additional support could result in "mass unemployment".

Businesses have had to contribute towards the salaries of furloughed staff since September, and will have to cover the full costs from the end of next month.

UKHospitality chief executive Kate Nicholls told The Caterer: "Around a quarter of premises in the sector are still closed. Those that have managed to reopen will still be trading at a reduced capacity.

"There are around one million workers in the sector still having their jobs supported by the furlough scheme and they are at risk of redundancy if further support isn't forthcoming.

"We lost a significant number of jobs in August as the scheme began to wind down and, as it ends fully, there will inevitably be further job losses."

Emma McClarkin, chief executive of the British Beer and Pub Association, added: "Our sector has been one of the hardest and longest hit by the pandemic. The government's furlough scheme saved hundreds of thousands of jobs from being lost immediately but as that now winds down it will start to become clear the level of economic damage that will be done in its absence.

"Brewing and pubs supports almost 900,000 jobs across every region of the UK and they are positions disproportionately occupied by young people. The furlough scheme allowed us flexibility as we rebuild our trade slowly but the government needs to act soon to put in place a sector-specific extension to the scheme to safeguard the economic contribution of the hundreds of thousands of brilliant staff in our pubs and breweries"

Starmer today (15 September) made an "open offer" to work with the government on replacing the furlough scheme with targeted support for hard-hit sectors such as hospitality.

"It just isn't possible to get back to work or reopen businesses," he told the Trades Union Congress. "It isn't a choice. It's the cold reality of this crisis.

"So it makes no sense at all for the government to pull support away now in one fell swoop."

Chancellor Rishi Sunak has repeatedly ruled out a blanket extension of the scheme, but employment minister Mims Davies told the BBC there could be more targeted support unveiled in the autumn budget.

It follows the publication of a report by the Institute of Employment Studies which predicts that redundancies across the economy could exceed "anything that we have experienced in at least a generation" this autumn.

The study estimates 650,000 people risk losing their job in the second half of 2020, and warns this number could rise with a hard end to the furlough scheme and tighter social distancing regulations.

The hospitality industry has already been hit hard by job losses, and the situation is worsening with a lack of clarity over future government support.

Brighton Pier Group, which is chaired by Luke Johnson, yesterday announced it has begun a redundancy programme with 10 of its 12 bars forced to remain closed. The Times reports almost 200 jobs are affected.

The company said the "lack of certainty" over reopening and the government's intention to end the furlough scheme meant it had to "terminate the contracts for those members of staff for whom we cannot currently provide any prospect of work for the foreseeable future".

Nightclub operator Deltic, which runs 53 clubs and bars across the UK, has also launched a consultation to cut around 400 jobs, according to The Mail on Sunday.

A survey by the Night Time Industries Association (NTIA), which represents 1,200 bars, clubs, casinos and music venues, found more than 80% of its members will have to lay off staff when the furlough scheme ends.

A spokesperson for the Treasury said: "The furlough scheme has done what it was designed to do – save jobs and help people back into employment.

"And many of our unprecedented interventions – including the Job Retention Bonus, business rates holidays, VAT cuts and the Kickstart Scheme – will ensure this support continues into next year.

"We've not hesitated to act in creative and effective ways to support jobs and we will continue to do so as we recover from this crisis."

Picture: Shutterstock

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