Coronavirus: 1 million jobs at risk as government leaves pubs, bars and restaurants ‘in limbo’ over pandemic

Social distancing measures risk putting thousands of premises out of business

Ben Chapman
Tuesday 17 March 2020 00:44 GMT
Londoners urged to avoid non-essential contact and work from home amid coronavirus outbreak

Up to 1 million workers in pubs, bars, restaurants and hotels face losing their jobs after Boris Johnson urged Britons not to go out in a bid to halt coronavirus.

Britain’s £120bn hospitality industry immediately hit back, saying pubs and bars were now “in limbo” without government support and with no ability to claim insurance for a huge decline in trade.

The prime minister announced new measures on Friday urging people to avoid all “non-essential” social contact, but pub owners warned the sector faces an “existential threat” unless the government urgently steps in with financial support.

The Unite union estimates that up to a third of the UK’s 3.2 million hospitality jobs are under threat as people stay home during the pandemic. Unite called on the government to pay the wages of workers who would otherwise be laid off.

Kate Nicholls, chief executive of trade body UK Hospitality, described Mr Johnson’s announcement as “catastrophic”.

“The government has effectively shut the hospitality industry without any support, and this announcement will lead to thousands of businesses closing their doors for good, and hundreds of thousands of job losses.

“Over the past few weeks, the industry has suffered unprecedented drops in visits and many business are already on their knees. This latest advice leaves the industry in limbo, with no recourse to insurance.”

It emerged earlier this month that many pubs would not be covered by their insurance policies for loss of trade caused by coronavirus.

The Association of British Insurers warned that only a small number of pubs are likely to have cover for what are known as notifiable diseases – a group of infections that must be reported to the government.

“Standard business insurance policies are designed and priced to cover standard risks and are therefore unlikely to provide cover for the effects of global pandemics like Covid-19,” the ABI said in a statement.

Emma McClarkin, chief executive of the British Beer and Pub Association, said pubs were already feeling the devastating effects of Covid-19.

“The very existence of thousands of pubs and a lot more jobs is now at risk,” she said.

“The government needs to give clear instructions and detail on the support package to rescue the sector and hundreds of thousands of jobs.

“Urgent measures to support cash flows and enable cost reductions is an absolute necessity.”

Chancellor Rishi Sunak is expected to outline further support for businesses at a coronavirus-related press conference with the prime minister on Tuesday, a UK treasury source has said.

That will be a test of the chancellor's vow in his Budget speech to do "whatever it takes" to support families and businesses through the coronavirus pandemic.

The package will need to be several times bigger than the £12bn he unveiled less than a week ago with the airline, rail and retail industries among those calling for immediate financial support.

French president Emanuel Macron unveiled a plan to guarantee €300bn of loans and suspension of the to support businesses through the disruption.

A failure by Mr Sunak to act similarly decisively would risk making many of Britain’s lowest paid and most financially insecure workers unemployed.

Hospitality staff receive worse pay than workers in any other sector at £10.70 an hour on average. That’s less than a quarter of the best-paid sector – financial services at £45 per hour.

A report published last year for the government body that oversees employment rights found that restaurant staff frequently work long hours for low pay, often on zero-hours contracts that give no security of income.

Dave Turnbull, regional organiser for the Unite union, told The Independent that many hospitality workers had already seen their hours cut before the government’s latest coronavirus guidance.

“We’re saying to the industry it needs to take a long-term view and we think the government also needs to step in and set up a scheme for workers,” he said.

He pointed to the example of Denmark, where the government announced a deal with employers on Sunday that will see the state pay 75 per cent of the wages of staff at risk of redundancy during the outbreak for the next three months.

“Action needs to be starting now,” Mr Turnbull said. “We can’t wait until the crisis hits us and we are fast approaching that crisis.”

He called on employers to hold off making redundancies and to consider options such as annualised hours where staff are paid for hours now which they then work later in the year when trade picks up again.

That may not be an option for many employers who do not have enough cash to pay staff if custom dwindles to almost nothing.

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