Richard Brown: London’s diners might have to pay higher prices if hospitality trade is to revive

As London’s pubs and restaurants make the first tentative steps towards re-opening after a disastrous year, with excited punters booking weeks in advance for chilly pavement tables, reports suggest they are struggling to find staff.

Restaurants, bars and hotels were having difficulty recruiting and retaining even before Covid, as Centre for London revealed in its 2019 report into kitchen jobs. Since then, the implementation of tougher immigration rules has combined with an exodus of overseas workers (estimated at anywhere between 35,000 and 700,000) from the capital during the pandemic to turn the crisis acute.

As the UK’s borders open up, some foreign workers will return, though the exclusion of many hospitality jobs from the “shortage occupation lists” that allow mid-skilled workers to obtain work visas will make replacing those who choose not to come back more difficult.

Home Secretary Priti Patel said last summer that “the new points-based system will encourage employers to invest in the domestic UK workforce, rather than simply relying on labour from abroad.” Given that more than 50 per cent of hospitality and food workers are foreign nationals, this approach may be tested sooner than she had planned.

Can the domestic workforce plug the gap for London’s hotels, restaurants and bars? With unemployment in the capital higher than in any other region (nearly 10 per cent of the workforce were claiming unemployment benefits in February), there’s a deceptively neat answer to the recruitment challenge.

But jobs in hospitality can be a tough sell. Despite the camaraderie and fun many experience, the work can be tough, with antisocial hours and limited opportunities for advancement. Right now, unemployed Londoners may be worried about exposure to the virus as customers return. They could also hesitate before seeking employment in a sector that will be first in line for closure if the government’s “irreversible” lifting of Covid restrictions results in the brakes being slammed on again.

And there are deeper issues of pay and conditions. In 2020, around one million people worked in hospitality (“accommodation and food services”) in London, according to government surveys. Almost 25 per cent of those workers were paid less than the National Living Wage of £8.20 per hour (for 21-24 year olds), and 75 per cent were paid less than the London Living Wage (designed to reflect the actual cost of living in the capital) of £10.75 per hour.

Can employers afford to pay more? Ingredient costs have been rising as a result of Brexit, and business rates in London penalise enterprises that take up space, such as the places people meet to eat, drink, dance and sleep. Business rates payable by restaurants in London increased by a third in the 2016 revaluation. On top of this, many hospitality businesses that have struggled to survive lockdown now face a precarious future, as social distancing persists even as tourists and commuters start to trickle back. It is a lot to ask the sector to shoulder the burden of raising wages on its own.

The government could do more, by extending business rate holidays in the short term and reforming business rates in the longer term. Landlords should show restraint when negotiating rents. But we also need to ask whether we are paying enough when we go out to eat and drink. Londoners eat out more frequently than people in other parts of the country, and the capital has restaurants that offer great value alongside the glittering palaces of oligarch-baiting excess.

Many Londoners celebrating the emergence of hospitality from its enforced hibernation and reflecting on how much they value eating out will have built up a stockpile of cash during the lockdown periods. Perhaps this is the moment to re-appraise the prices we pay, so that essential and skilled tasks such as taking orders, cooking food and washing plates are well enough rewarded to attract people with the skills the sector needs, both from the rest of the world and London itself.

Richard Brown is Acting Director of think tank Centre for London. He has written this piece in a personal capacity. Follow Richard on Twitter.

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