Around 600,000 jobs will be lost in the hospitality industry by February without further government support.
The warning came from trade body UKHospitality in a plea to Rishi Sunak ahead of his spending review on Wednesday.
The letter to the chancellor said additional financial support is “absolutely vital” to ensure hospitality businesses survive a bleak winter.
It came ahead of the government’s Covid Winter Plan for when lockdown in England ends on December 2, with a stricter series of regional tiers expected.
The association warned that hospitality is set to lose the majority of its ‘golden quarter’ with Christmas sales severely depressed, as it then heads into the worst quarter for sales, from January to March.
The removal of the Job Retention Bonus (JRB) has also materially damaged businesses’ ability to survive and creates a £2.1 billion black hole in the sector’s finances in February.
The letter calls on the government to act in five areas to protect hospitality businesses:
- Announce a successor scheme to JRB as soon as possible, with an early drawdown facility
- Extend the business rates holiday for a further year from April
- Continue the VAT cut for hospitality and tourism for the duration of 2021
- Broker a workable solution on the huge rent debt hanging over the sector, supported by a moratorium extension
- Maintain the VAT Retail Export Scheme.
This package of additional financial support will put the sector in a position to rebuild next year and continue its position as a major contributor to economic and social wellbeing across all regions of the UK.
UKHospitality chief executive Kate Nicholls said: “The support received so far from government remains greatly appreciated, including recent announcements on the extension of furlough for our teams and grants for closed businesses.
“Yet these do not go far enough to protect businesses’ bottom line, and, in the case of the removal of the Job Retention Bonus, actively damage their ability to survive.
“The consequences of the withdrawal of the JRB are severe. While the sector has done its utmost to retain staff, almost half of businesses believe that they will now be forced to make redundancies because of this decision.
“More broadly, with the right package of support, the chancellor can help the sector navigate the challenging landscape ahead, protect as many viable businesses and jobs as possible, and allow people to enjoy safe and welcoming hospitality across the country.”