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What Will A No-Deal Brexit Mean For Hospitality?

JodyP 6 March 2019
What Will A No-Deal Brexit Mean For Hospitality?

There are now less than two months before Britain leaves the bloc. And, we are none the wiser to knowing what sort of relationship we will have with the EU after March 29th. Will we leave with a deal or without one?

If we leave without a deal, the consequences will be catastrophic. Industries will suffer and Britain will be poorer as a result. One sector that will be particularly affected is hospitality. In a recent survey, 73 per cent of companies within hospitality felt leaving the EU would have negative consequences for the sector. In a more damning assessment, a survey by YouGov found 3 per cent of hospitality businesses were planning to close because of Brexit.

One area where the effects of a no-deal would be felt is on access to labour. Hotels, bars and cafes hire EU migrants to work as cleaners, in front-of-house and in service roles. The CBI estimates that three quarters of EU citizens fill waitressing roles, one third are in housekeeping, and a fifth are in kitchen and catering. There are also considerable numbers of EU citizens working in mid-skilled roles and the wider supply chain. For example, more than a third of employees are involved in the upkeep of linen in hotels. All of these will be affected if we suddenly leave without a deal.

If this does happen, the Government has announced the ‘European Temporary Leave to Remain’ scheme which keeps the rules much as they are now. EU citizens will be able to come here, study and work freely. But it only lasts until the end of 2020. Current EU citizens will need to apply to stay through the EU Settlement Scheme. After that, they will be subject to the same rules that non-EU citizens currently are.

There are though a number of problems with the immigration changes. The first is that because of the changes many EU citizens may choose not to stay in the UK. Twelve per cent of the staff in the hospitality sector come from the EU. If even a small number of these choose to leave, that’s going to have a huge impact on the sector.

The changes may also make it harder for hospitality companies to recruit seasonal and temporary staff. Forty per cent have already reported struggling to fill seasonal and temporary roles since the Brexit vote. If there’s a no-deal Brexit and with the changes to the immigration rules, it’s likely to mean that situation gets worse.

The other problem is with the proposed £30,000 cap at the end of the ‘European Temporary Leave to Remain’ scheme. Katie Nicholls, the UK’s hospitality chief executive, told the Guardian it would “shrink the talent pool and hit every aspect of hospitality from hotels, restaurants and bars, to the cost of people’s morning coffee.” Workers who are paid under this rate wouldn’t get the freedom to access the UK as they do now. The new system due to come in after 2020 will work much the same as the non-EU Tier 2 Visa route.

For non-EU citizens, it is currently the most common way to enter the UK. In order to come in this way, a person will need to satisfy a number of criteria under the points-based immigration system. A Sponsor Licence application is necessary for this process: companies will be asked to prove their legitimacy and why they need migrants to fill the job role.

According, to a submission to the Migration Advisory Committee, 96 per cent of EU workers currently within hospitality wouldn’t gain entry under the non-EU system. Such a loss of labour will prove devastating for the sector.

Trade is another issue for hospitality in the event of a no-deal Brexit. Food and drink are a big part of the industry’s selling point. In the event of a no-deal, this could become even more important as foreign tourists take advantage of a devalued pound to holiday in the UK. But it could struggle to fulfil their demands with tariffs on products needed for their services costing more than £9 billion. A no-deal Brexit would particularly hit food and drink coming into the UK, with an average tariff of 27 per cent, instead of 4 per cent for other products. And, although the Government has initially pledged not to carry out checks on products coming in to the UK, we don’t know what it will be like longer term. If there is an issue with perishable food and other goods coming into the UK in a quick time-frame, that could hit the industry’s ability to provide its services. Separately, access to furniture, fixtures and fittings could become a problem if trade is hindered because a lot of it is made in Europe. Some in the industry have talked of stockpiling to avert this.

It’s clear the damaging impact a no-deal Brexit would have on the hospitality industry. It will affect its ability to access labour, lead to troubles with trade and hamper investment and opportunities. For the sake of the industry, the Government must work towards ending the prospect of a no-deal Brexit because jobs and livelihoods depend on it.

Jack Gevertz is a writer for the Immigration Advice Service; an organisation of UK immigration solicitors which provides legal support for those looking to migrate to the UK or hire overseas workers.