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Staff Shortages and High Demand Causing hospitality businesses serious problems

by | Jun 4, 2021 | Blogs, Hospitality

Data from S4labour, shows a reduction in the size of the hospitality workforce of 29% since February 2020 (pre-pandemic).

 

Coupled with the reduction in the workforce we can report that 26% of employees remain on furlough.

 

The challenge that these figures represent is further amplified when we consider that since the recent lifting of restriction sales have been up 34% against 2019 figures.

 

Richard Hartley, Chief Innovation Office for S4labour commented “It is great to see so many hospitality businesses thriving after such a terrible last year, but the lack of available staff is putting a huge pressure on businesses. With Furlough due to continue until the end of September and with restrictions on traveling to the UK to work this isn’t a problem that is going to go away quickly”

9 Things To Know About The New Tax Year

by | Apr 1, 2021 | Blogs, Hospitality

Personal Tax Allowance

Personal Tax Allowance change from £12,500 to £12,570; basic rate 20% bandwidth £1 to £37,700.

Furlough Extension

 New employees on RTI submission before 2nd March 2021 are eligible for furlough from 1st May 2021.

Furlough Contribution

From 1st July 2021 you will need to pay 10% (or 1 eighth) of the 80% furlough amount. From 1st August 2021 you will need to pay 20% (or 1 quarter) of the 80% furlough amount.

NEW Taxpayer Protection Taskforce

 1,250 HMRC Operatives will investigating furlough claims.

Plan 4 - Scottish Student Loan Rate

Student Loan Plan 4 (SLP4) introduce a new STARTER DECLARATION.

NMW & NLW Changes

Applicable from pay period starting 1st April – Read More

SSP

The weekly rate will be £96.35, or an unrounded dayrate of £13.7642.

SPP

£151.97 per week or 90% of average weekly earnings (whichever is lower); no change to empolyer recovery anticipated.

NI Rates

No changes

Important changes to NLW and NMW

by | Mar 16, 2021 | Blogs, Hospitality

Important changes to NLW and NMW

National living wage increases have become a metronomic feature of the financial year, and while this year’s increase is nothing untypical, both Furlough arrangements and the changes in age brackets mean that the rate increase is more complex than usual. There are three main highlights to familiarise yourself with before this April’s NLW and NMW changes; the increase amount, the age bracket the increase relates to and the Furlough scheme.

Firstly, the rate change itself. On the 1st of April 2021, NLW is due to increase from £8.72 per hour by 2.2%, to £8.91. In addition, NMW is set to increase by 2% for workers ages 21-22 to £8.36, 1.7% for workers aged 18-20 to £6.56, and 1.5% for workers aged 16-17 to £4.62.

 

Importantly however, the NLW age bracket for workers will drop from 25 years old to 23 years. This is particularly impactful for an industry like hospitality where there is a high proportion of younger employees. In fact, by dropping the age from 25 to 23 it will impact the pay of roughly 10% of hospitality employees.

Whilst the increase will be welcomed by employees across the UK, they may be disappointed to learn that this will have no impact on the amount they receive whilst on Furlough. Government guidance has stated that while Furlough will continue into the summer, employees on Furlough are not subject to the increase and their furlough pay will remain based on reference periods before to the increase. However, employers will have to pay NLW / NMW for holiday pay or while an employee is on training.

This will give some businesses a conundrum on how to maximise the benefit of the Furlough and Flexible Furlough schemes when considering who to bring back to work and who to keep on the scheme. By leaving employees over the age of 25 on the scheme while bringing back younger employees, some of the increase will be held for the short term, before reaching the point of relinquishing Furlough. It is important to acknowledge that any factors concerning employees should not contravene age discrimination legislation.

Hospitality suffers 540,000 jobs in 2020

by | Feb 19, 2021 | Blogs, Hospitality

Hospitality Suffers 540,000 job losses in 2020 and is on the verge of losing a significant amount more.

There are many industries that have suffered throughout 2020, but hospitality has been near uniquely placed at the forefront of every conceivable damage the pandemic and social restrictions could throw at it. That’s not to say that other sectors have not had it hard, but few will have to had to navigate the never ending variations of restrictions and closure hospitality has.

Analysis from S4labour shows that the result has been 539,000 job losses; circa 20% of total hospitality employees, during the full calendar year. By contrast, every other year (we looked back to 2010) has had positive growth of hospitality employees.

Hospitality employment has always had peaks and troughs, however, last year, we can quite clearly see figures align, not with the usual seasonal trends, but with government policy announcements. The first spike in job losses occurs in weeks 11-13, in March 2020 where 91,000 employees were let off in a three-week period, just as the crisis hit and hospitality was shut; government support was not foreseen at this point. There was another spike of job losses that occurred of 42,000 in one week just as the government announced the November restrictions and all but cancelled Christmas.

The only occurrence of a positive new starter rate since March 2020 occurs in the week 3rd August; the start of the EOTHO scheme. However, this was just after two spikes of job losses in July, likely to have been caused by the end of fully supported Furlough, covering NI, holiday pay and pensions.

Trends identified in this research shows clear lack of foresight by the government, as has followed for the whole of this crisis; a lack of clear communication with the industry that accounts for 5% of UK GDP and 10% of UK employment. S4labour demands that hospitality is provided with a roadmap, a clear and concise mission aimed at the opening of hospitality, to prevent another huge round of job losses in the next few weeks, following the announcements on Monday. The lack of foresight and the suggestion of just outside pubs and bars opening, will bring yet another round of job losses to those pubs and bars with no option to serve outside. It simply isn’t enough to say that pubs and bars can only open with very aggressive restrictions, as this does not bring profit that is desperately needed at a time where the industry is run to the ground. Pent up demand and the knowledge that it is safe to go to a socially distances pub cries for pubs to be given a clear opening date on the 22nd Feb when we are to hear whether we sink or swim in the next few months.

Chief Customer Officer Sam Wignell added “It is crystal clear, it is not the viability of these hospitality jobs that is the issue, it is the lack of reasonable communication and clarity. If the government is serious about keeping jobs, when we are on the verge of losing a significant amount more, a clear road map and a stimulus package similar to EOTHO is required.”

The True Cost of Furlough

by | Feb 3, 2021 | Blogs, Hospitality

Furlough costs the UK Hospitality industry in excess of £542 million a month during lockdown – The True Cost of Furlough

Furlough has been a lifeline for so many businesses in the hospitality sector and beyond, however despite all that the scheme has done to ease the mass redundancies and retain jobs in the sector, it is clear that Furlough is not the free lunch it is sometimes portrayed as. Operators using the scheme benefit from a grant that covers up to 80% of their employee’s average earnings (probably the most simplistic way of describing the behemoth of complex exceptions, limits and grey areas associated with the CJRS). For many employees, this money will see them scrape through the crisis, albeit uneasily. However, for the employer, the ability to be able to keep teams employed comes with a cost and it is no insignificant amount.

For a start, the employer continues to pay National Insurance contributions, holiday is still accrued, and pension costs are not included in the grant. The total figure for average extra employment costs per month per site, over and above government furlough support, comes to: £3,738 which means the monthly furlough bill for hospitality comes to £542 million.

On top of employment costs, operators have rent to pay, utilities and insurance payments; government grants based on rateable value are available and are aimed at offsetting a large sum of bills, yet leave operators constantly out of pocket. There are also variable costs to using the Furlough scheme, such as cash flow costs owning to the fact that the scheme pays in arrears: operators are seeing the money leave their businesses, before being able to claim it back. For most businesses who have little or no expectations of trading profitably for the first 4-6 months of 2021, funding is becoming more and more critical.

Rob Pitcher, Chief Executive of Revolution Bars and user of S4labour said that the scheme, while welcome, has cost the business £1million at a time it has seen revenue vanish.

Sam Wignell Chief Customer Officer at S4labour added: “With the current levels of government support, businesses are going to run out of cash before they get the opportunity to reopen. The true cost of furlough is much higher than one might imagine.”

As featured in:

The Future of Hospitality

by | Dec 4, 2020 | Blogs, Hospitality

The future of hospitality – we are part of the solution and not the problem by Alastair Scott

I am surprised the quote from Mark Twain of: “There are three kinds of lies: lies, damned lies and statistics” has not been used more over the past nine months during the covid-19 pandemic. Theresa May made a similar point when she said that policy should follow the evidence rather than the evidence be found to justify the policy. We all feel, at the moment, the hospitality industry is suffering from some combination of these two factors to try to either severely wound us or kill us off from a health lobby that likes to blame society’s problems on us. But with adversity there is always opportunity and I would like to suggest that, as an industry, we have two opportunities. The first is to consistently use evidence-based arguments with whatever we do and whomever we see. The second is to use the statistical richness of the past nine months to really test and prove wrong many of the negatives about the hospitality industry.
 
The immense value of statistics
It is amazing what you can do through statistics. The whole of my final year at university was spent modelling the spread of Aids, in which my tutor was an expert when Aids was a real danger to lives. Interestingly, from my college, we also had a lot of people progress to be decent journalists – all the ones I know studied English literature. I think this is why I see the world perhaps a little differently to others (some would argue not just a little) – where others seek the headlines, I seek facts and want to come to my own conclusions about the implications. But in a world of Twitter and mass competition for the headlines, the operating practice of too many journalists has become to exaggerate and to rush out the headlines without the necessary due diligence.
 
Closures continue
But the headlines are affecting us. The general population is starting to believe transmission does take place in our venues rather than understanding the greater risk in their own homes for the same activity. Not only is this affecting the cities where millions of people have changed their working and socialising practices but also in the towns and villages I frequent, in which I have seen hospitality venues close at an unprecedented rate. While, in theory, the market should have grown, operators have not survived because of the combination of forced closures and social distancing rules. And with Christmas in hospitality just about cancelled, VAT payments and loan repayments due from April onwards, and rates and VAT kicking back up, the future still looks bleak. But how do we make the best of the situation?
 
The use of science is the new norm
As an industry, I feel we have to move to a new way, and that is to produce more credible and better science than anyone else. In the past 12 months, we have had the best, controlled experiment we could have ever had. In the first lockdown, hospitality was completely closed, which allowed us to do lots of work on the effects of removing hospitality from society. We are now entering a phase where you can’t just drink in a pub, but only eat AND drink, and so we will be able to gather even more evidence. And the statistics might be easier in this phase now the rest of our society is running more normally. We can also, of course, even now get our own scientists to present the evidence on Test and Trace and the positive effects of a covid-safe hospitality industry on the spread of the virus. We should all ask our industry bodies to walk around armed with a scientist at every meeting because this is now becoming the new norm – giving that scientist a wealth of evidence to support the cases they make.
 
My hypotheses
I think there are several hypotheses we need to test to see what the mass of evidence says about them:
1. That the transmission of coronavirus is lower when people meet in hospitality than it is in the home because of the better adherence to rules and the ventilation in hospitality
2. That alcohol consumption goes up if you close pubs, as evidenced by the alcohol studies in the first lockdown
3. That obesity levels rise when hospitality closes, as again evidenced by the first lockdown
4. That hospitality, as part of web of social contact, plays a much bigger role in improving mental health than anyone previously understood and, in particular, in young people
5. That government rules are being broken on an increasingly frequent basis and the only way to manage this pandemic is to protect the vulnerable and let the rest of the population make their own risk assessments and get on with their lives
 
Of course, these hypotheses need testing to a greater degree than my limited search for evidence. There have clearly been other events that need to be carefully eliminated and their individual impacts understood. But this will only help to corroborate the evidence and give greater credibility to the end result, and some of the goals could transform our industry.
 
The goal
While hospitality has been treated shoddily over the past three months since the glory days of Eat Out To Help Out, our focus has to be on the long term for our industry as well as the immediate impact to try and rescue what has now become the most parlous state the industry has been in during my lifetime. This will be founded on changing entrenched government attitudes towards hospitality and developing a greater understanding of the total societal benefits. I, for one, am still hopeful the chancellor will understand the damage done and roll forward the VAT cut and the rates relief for at least another 12 months. While this will not save the many businesses that are now set to fail, it will breathe new life into hospitality, and I hope create a new wave of people in hospitality that recognises how talking, laughing, debating and just sitting near other people is something to be cherished and appreciated by society as a whole and not just us.
Alastair Scott is chief executive of S4labour and runs Malvern Inns
S4labour is a Propel BeatTheVirus campaign member