UKHospitality: Autumn optimism?
Kate Nicholls, chief executive of UKHospitality, looks ahead to the chancellor’s upcoming statement...
Hampered by soaring energy, wage, food and drink costs, hospitality’s post-pandemic return to growth hasn’t quite reached the levels we’d all anticipated and hoped for. Contract caterers, like the rest of the industry, will be hoping that November’s autumn statement creates the conditions necessary for the sector to deliver faster and sustained growth.
Independent analysis shows that the right conditions could enable hospitality to add a further £29bn in gross value added, reflecting the potential for annualised growth of 6% – far more than the wider UK economy. Not only that but we believe that the chancellor’s autumn statement, coupled with longer-term measures, could ease one of the issues holding our industry back: the workforce – or rather the lack of it.
Despite the fact that the sector employs some 3.5m people, there are still high vacancy rates in hospitality, with feedback suggesting UKHospitality members have foregone sales of around £20bn, as labour shortages mean businesses open fewer days and hours and restrict their offering. These same businesses are also reporting at least a 10% increase in wage rates for both new and existing staff. We strive to work with government to tackle economic inactivity and get more people working in hospitality, before looking at longer ways to ensure that the immigration system works effectively to avoid sector vacancies.
Key measures in the autumn statement that would help stimulate growth and investment are reform of the Apprenticeship Levy, further development of the Department for Work and Pensions’ (DWP) pilot project to get economically inactive people into the sector and negotiation of Youth Mobility Schemes with leading European partners to fill existing labour shortages.
Encouragingly, the DWP pilot is already achieving positive results via a new approach to getting people into work, by adapting the existing sector-based work academy programmes (SWAPs). This delivers an initiative, designed by UKHospitality, that ensures candidates are job-ready, have guaranteed opportunities and are set on a path to apprenticeships that are appropriate for employer and employee alike.
This approach to skills delivery supports our call for reform of the Apprenticeship Levy, to allow up to 25% of levy funds to be used for non-apprenticeship training and to facilitate a modular approach to apprenticeship delivery. Having more funding available for short courses will allow people to build their transferable skills and, should it work for them, convert these into apprenticeships. This would help to resolve the issue of learners being deterred by a 12-month commitment. It will also help employees who switch employer and those who work seasonally.
Alongside bringing more economically inactive people into the sector and upskilling our workforce, there is a need to look at the immigration system. The skilled worker scheme has worked well for some employers but is costly, bureaucratic and particularly onerous for small businesses. Government should supplement the immigration system by actively instigating Youth Mobility Scheme agreements with a range of European nations.
It's not just about the workforce, of course, and we’re also calling for government action that will see current business rates relief extended, a review into the benefits of a reduced hospitality sector VAT rate, rapid implementation of Ofgem’s non-domestic energy market review and the introduction of proposed planning reforms.
While hospitality is undoubtedly on the right track to a full recovery, we can, given the right economic environment, do so much more. This includes outgrowing the wider economy, creating hundreds of thousands of jobs, upskilling the domestic population and investing in communities. This will only be possible, though, with a positive autumn statement from chancellor Hunt.
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