Many hospitality venues will not run at full capacity over the festive period and consumers can expect to be hit by price rises and disruption to supply chains in the new year, industry leaders have warned.
Giving evidence on Tuesday to the Commons Environment, Food and Rural Affairs Committee, representatives of the retail, logistics and hospitality sectors told MPs to expect only a minor reduction in the choice of goods available on the shelves in the run up to Christmas.
But they called on the Government to take decisive action to address labour shortages in the longer term, and warned that recruitment challenges would continue to stifle the recovery from economic impact of the pandemic.
Kate Nicholls, chief executive of trade association UK Hospitality, said there was a 10% vacancy rate across the sector which amounts to a shortage of about 200,000 workers in venues including bars, restaurants and nightclubs.
She added venues were experiencing a “double whammy” of problems in recruitment and the supply chain.
Ms Nicholls said: “It is the cruellest of ironies that at the point at which you are reopening, [with] a desperate need to rebuild cash reserves, shattered balance sheets and trade your way out of this… your ability to do that is constrained by the fact you don’t have access to sufficient labour and revenues are supressed by about 15-20% in the sector, simply because of labour shortages in our businesses and the supply chain.”
She said a quarter of Hospitality UK’s members have had to reduce opening hours, close venues and refuse bookings as a result.
Asked what impact this would have over the busy festive period, Ms Nicholls said the industry’s supply chains were subject to “continual shocks” and subsequent price increases that will affect consumers.
She added: “I don’t think we can give the hospitality that we would like to because, obviously, we would prefer to be operating at full capacity and not turning away business, which we are having to at the moment.
“Christmas is our golden quarter as 40% of hospitality profits are earned between Halloween and New Year’s Eve, so it is vital for the health and success of the recovery of the sector that we are able to deliver Christmas as fully as we can.”
Asked if labour shortages have been caused predominantly by the absence of a coherent post-Brexit domestic workforce and skills strategy, and the ineffectiveness of government employment initiatives, she said: “Yes, I think that that gives a good overview of the main reasons that we have got labour shortages in our sector.
Ms Nicholls added: “There is significant cost price inflation coming through the supply chain and hitting and passing through to consumer prices probably after Christmas in all likelihood, but some of our businesses are anticipating three price increases going through before we get to April.”
When asked whether consumers will experience shortages in supermarkets in the run up to Christmas, Andrew Opie, director of food and sustainability at the British Retail Consortium admitted there would be “intermittent issues around availability and choice”.
But he added: “I think the good news is that it will be Christmas as we know it so there will be the usual Christmas fare in stores.
“You have got a highly competitive retail sector and this is the most important time of the year so every retailer will have planned for Christmas, and we will be looking to deliver a good Christmas.”
However, Mr Opie said there were serious concern over supply chains in the new year and beyond.
He added: “Whilst we are seeing some short-term acute problems, HGV drivers being probably the most obvious one for our sector, this is a long-term issue which needs a proper solution – frankly around our whole food supply chain.
“We do need a real policy from the Government to help us solve that problem.”
Mr Opie said short-term targeted migration should be considered as an option to help solve the crisis.
He added: “We need to have an honest conversation around what part migrant workers may play in the food supply chain because if we don’t solve that conundrum in the next couple of years, what we will start to see is production being lost from the UK and being offshored and then imported back into the UK, and surely that isn’t what anybody wants.”
Hundreds of healthy pigs have been killed on British farms due to a shortage of abattoir workers.
In October, the Department for Environment, Food and Rural Affairs announced funding to enable meat processors to store slaughtered pigs for three to six months in private cold storage facilities so they can be processed at a later date.
Tom Southall, policy director at the Gold Chain Federation which represents businesses that run the temperature-controlled supply chain, told the committee his organisation was yet to receive any detail from the department on how the scheme would be rolled out.
He said: “Talking to our members, we haven’t found anyone who has actually been approached about providing that extra storage.
“So we are concerned, I think it is approximately 15,000 tonnes is what they are aiming for, where the frozen pork meat is going to go.”