Opinion: what could a no-deal Brexit mean for hospitality?

Alexandra Jarvis By Alexandra Jarvis
Uploaded 19 March 2019

Alexandra Jarvis of the Immigration Advice Service gives BHN her interpretation of the effects a no-deal Brexit could have on the UK hospitality sector.

The UK is now counting down the days until it is supposed to be leaving the European Union on 29 March. However, with little further clarity on whether the UK will leave with a deal, and with 'no-deal' being the "default position" according to PM Theresa May, anxieties are rising in the hospitality sector over the potential ramifications a no-deal Brexit will bring.

It is undeniable that the consequences of a no-deal Brexit will be far-reaching and potentially catastrophic, leaving Britain's economy poorer than before. The UK's large hospitality industry is particularly at risk, as reflected in a worrying survey result by YouGov which found three per cent of hospitality businesses were planning to close because of Brexit.

Hospitality's vulnerability is clear - no-deal will affect its labour force, with EU migrants working as cleaners, front-of-house staff and in-service roles in hotels, bars and cafes. It is estimated 12 per cent of the industry's entire workforce originate from the EU. According to The Confederation of British Industry (CBI), three quarters of waitressing roles are filled by EU citizens, one third in housekeeping and a fifth in kitchen and catering jobs, as well as EU workers in mid-skilled roles. This highlights the popularity of the industry for EU citizens under pre-Brexit Free Movement rules.

In the event of a no-deal Brexit, EU citizens will have access to the 'European Temporary Leave to Remain' scheme until 2020 which allows EU citizens to work and study here. Yet this measure is merely temporary, with new EU members potentially being unaware of the system and missing out post-2021 when the policy becomes redundant.

However, regardless of whether the UK crashes out of the bloc or not, the 'skills-based' immigration plan is scheduled to come into effect by early 2021. All EU workers will be subject to visa restrictions, under which hospitality staff will need to fill - and pay for - a Tier 2 Visa application.

To add to the sector's troubles, Tier 2 Work Visa rules are incredibly restrictive and would see a plethora of potential staff ruled out from entering the UK's hospitality sector: the CBI found under the Government's current policy up to 96 per cent of EU workers in the industry would not be eligible. EU citizens will have to earn at least £30,000 a year, (a figure that immediately halts the arrival of front-of-house staff) as well as have at least £1,000 in savings which puts barriers in place for many, particularly younger people. Kate Nicholls, UKHospitality chief executive, claimed that a no-deal Brexit 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 the £30,000 threshold wouldn't get the freedom to access the UK as they do now.

As it currently stands, recruitment levels in the sector are already down. However, once UK employers will need to make a Sponsor Licence application - a timely and costly process - in order to legally recruit non-UK staff members, many businesses could be driven out or struggle with widening vacancy gaps. Although the immigration white paper released in December 2018 claims the Sponsor Licence process will be 'streamlined', the paper doesn't offer any leeway.

At the large end of sponsorships, obtaining a licence can cost up to £25,000, and recruiting a non-British staff member incurs a £1,000 Skills Charge and another £199 to provide their Certificate of Sponsorship (CoS). Already the loss of Free Movement will be felt in restaurant owners' pockets, while others fear the off-putting process will become a huge hurdle when it comes to recruiting managers and employees.

Trade will also be significantly impacted, with statistics showing the UK received over £48 billion of food and drink into the UK last year coming from the EU and over 70 per cent of that trade coming in free of tariff costs and duties. In the event of no deal, the huge costs for hospitality's supply chains could soar as we adopt The World Trade Organisation's rules instead of EU policy, with an average tariff of 27 per cent for food and drink coming into the UK.

The Government have initially pledged not to carry out checks on products coming into the UK, but there is no long-term solution being presented, leaving the industry and the country in the dark with regard to the future of trading partnerships.

It is clear that the impact of a no-deal Brexit on labour and trade will present some initial problems leading to less investment and opportunities for those in the sector, directly affecting people's livelihoods. Yet the scheduled immigration plan is set to do the worst damage to the sector. Under the proposals, retaining and recruiting staff could be a major problem for the sector, and relying on residential talent alone will not suffice to keep growing vacancies at bay. Regardless of whether we crash out of the bloc without a deal, it is imperative the Government protects job security and revises the visa system before it damages the sector beyond repair.

Alexandra Jarvis 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.

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