Pubs and restaurants face a “cliff edge” in October with far more jobs likely to be cut than previously thought, MPs have been told.
The head of UK Hospitality said the sector was “in stasis”, warning that planned new government support was not enough to avoid more mass job losses.
Kate Nicholls said industry research had anticipated 560,000 cuts by the end of 2020, but she now feared far more.
Furlough support is replaced at the end of October by a less generous scheme.
The Treasury said it had “supported the hospitality sector from the start of the outbreak”.
But Ms Nicolls told the Treasury Select Committee a combination of the 10pm curfew, local lockdown restrictions and downturn in customer confidence had piled more pressure on the industry.
She said research by UK Hospitality two weeks ago anticipated 560,000 additional job losses by the end of the year.
But she added: “We are doing that data again but we anticipate it will be far higher due to local restrictions, the national constraints on events, working from home and the curfew,” she said.
The furlough scheme will be replaced by a less generous Jobs Support Scheme, which will see the government pay up to 22% of wages for workers who come back part-time from 1 November.
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She told MPs: “We fear that unless there are amendments for those areas which are particularly hit, you won’t avoid the cliff edge in October and we have got large numbers of redundancies that are forecast in October because of how the jobs support scheme is set up.
“There is a very real danger that we will lose large chunks of the economy – in hospitality we will have insolvent businesses, businesses going into administration and therefore that engine of growth for re-employing people will be lost for good.
‘Between a rock and a hard place’
“I think that’s what we need to be focusing on to make sure we support viable jobs for the future,” she said.
“Ninety-one percent of our members said that the job support scheme wouldn’t be able to help them retain jobs because of the additional costs and restrictions that they were facing.”
The sector is “caught between a rock and a hard place,” Ms Nicholls added, and called for sector-specific support from the government.
Without such support, “there is a very real danger that we will lose large chunks of the economy”.
The CBI business lobby group said Chancellor Rishi Sunak might need to offer more job support if the number of coronavirus cases continues to rise.
“The Job Support Scheme will help to save hundreds of thousands of jobs,” said CBI chief economist Rain Newton-Smith. “We do think, however, that as this crisis evolves, [the] chancellor should stand ready to act.”
She said that if the crisis escalates over the winter months, “we do think that for certain sectors and certain businesses, we may need to see additional support”.
Paul Nowak, deputy general secretary of the Trade Union Congress, said the Job Support Scheme was “really important in avoiding that cliff-edge” at the end of October as the furlough scheme ends.
However, he added: “The big concern, of course, is for those parts of the economy that can’t open up, because of government guidelines.
“The scheme only supports those employers that are able to bring people back to work some hours.”
Under the government’s furlough scheme, workers put on leave have been able to get 80% of their pay, up to a maximum of £2,500 a month.
That scheme has been winding down, and at the end of October will be replaced by the Job Support Scheme, which will top up salaries in firms which cannot take people back full time.
Mr Sunak has said the government only wants to support “viable jobs”.
A Treasury spokesperson said: “We’ve supported the hospitality sector from the start of the outbreak, protecting millions of jobs through initiatives such as the Eat Out to Help Out scheme, VAT cuts, business rates holidays and cash grants of up to £25,000.”
“Our support for business continues to reach millions of firms, and we stand ready to do more as necessary.”
Businesses can still access Treasury loan schemes, and there is a moratorium of eviction for commercial tenants and a Statutory Sick Pay Rebate Scheme, the spokesperson said.
“The Job Support Scheme is designed to protect jobs in businesses facing lower demand over the winter due to Covid, and is just one form of support on offer to employers during this difficult period.”
- Hospitality industry
- Rishi Sunak
- UK economy
- Coronavirus lockdown measures
- Coronavirus pandemic
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