Without immediate help, new Welsh Government rules will lead to thousands more jobs losses and usher in the collapse of the hospitality sector in Wales, warns WIRC.
The First Minister’s statement last night urging people to avoid non-essential travel will be the final nail in the coffin for many pubs, restaurants and cafes in Wales if it is effectively tells the public not to visit hospitality venues outside of their immediate area – there is simply no way the industry can survive if that advice is widely followed. The First Minister must clarify that this was not his intention and draw attention to the fact that the vast majority of hospitality venues are safe to visit and should continue to be supported.
The sector is already in crisis – from the 6000 job losses announced by Whitbread today to the 12,000 estimated to have been lost so far in the independent sector in Wales alone. The scale of the collapse is beyond dispute even before the additional measures announced today which can only accelerate job losses and business failures.
The barriers to viable trading are now immense. Loss of turnover due to the 2m rule both in terms of lost covers and limitations of staff numbers in the kitchen is now compounded by the rule of 6 and in particular the Wales rules on extended households only. The 10pm closing rule will be crushing for some businesses particularly those in city centres where there is a late evening culture and 2 sittings in an evening will not now be possible.
Action has to be rapid and almost immediate.
If time is needed to formulate the best ways to direct help in consultation with businesses and unions then there at least needs to be an indication that significant help is coming. Back in July it was the case that businesses were making decisions on jobs now they are making decisions on closure. For many the only thing that will keep them going in the coming days and weeks is borrowing – they will not be able to do that without light at the end of the tunnel.
It’s not just the direct effect on the sector although that is justification in itself. The knock on effect on the economic ecosystem that surrounds hospitality is already enormous. For the most obvious example look in the direction of Castell Howell but there are thousands of small businesses that to one degree or another are dependent on the survival of the sector.
In turn that means that government assistance to the sector benefits from a huge multiplier effect. Independent Welsh based businesses in particular spend the vast majority of their budgets with other Welsh businesses. A recent WIRC survey indicated that for every £1 received by these businesses around 75p stayed in Wales.
The effectiveness of the furlough scheme has diminished substantially. For the independent sector at least, once employer contributions were needed it started to become unaffordable with little in the way of income coming in. August's Eat Out To Help Out was a help but numbers were still restricted. Now the numbers are failing and the bills are mounting. It is becoming simply impossible to meet fixed costs.
If we are to save jobs, businesses and have a sector left to rebuild in recovery then the government must act quickly to be effective. We are ready as businesses to work with Welsh Government to launch effective action without delay.