Yesterday evening following the Brexit vote, I concluded a briefing with No 10, the Chancellor, Business Secretary and Brexit Secretary on the vote and next steps. Key points are set out below but this call was in the immediate aftermath and the situation is fast moving and may well evolve further.
The Government was “disappointed but not surprised” by the scale of the defeat. It has now moved swiftly to allow no confidence vote and debate to take place and are confident of winning - both DUP and ERG have said they will support the Government in the vote so believe a General Election would be unlikely. The first vote will take place at 7pm today.
The key take out message was that this is a signal of what MPs are against, not what they may be for and early signals from many that despite the vote they do want a negotiated agreement. The Prime Minister's strategy is to now reach out to senior parliamentarians and leaders of the opposition parties over the next three days to talk about aspirations on a realistic way forward and a Withdrawal Agreement which can command majority. Then will return to the House of Commons on Monday (21 January) to hopefully bring it to an expedited conclusion.
Process and timetable
Process and timetable need to have agreement in the House of Commons before the Government can approach the EU for renegotiation and as part of that will look to extend Article 50 deadline if more time is needed to reach a conclusion and ratify. The Chancellor was clear the EU would not consider a request for extension, unless and until, we had a clear consensus and plan; but is confident that extension would be granted to secure a smooth Brexit. The Prime Minister returns to the House of Commons on Monday at which point amendments on 'no deal' and other indicative matters are likely to be taken and negotiations with the EU will carry on over next week. They hope to have a resolution within 10 days.
The Chancellor made clear that there is no likelihood that the EU would fundamentally reopen the withdrawal agreement and will therefore focus of amendments; and input will be on the political declaration and there was talk about addressing Labour concerns about retaining worker rights protections and environmental standards as part of this. There is no signal of movement, yet, on a customs union which Labour says is needed to get their support.
A Bill has been tabled by backbench MPs and senior cross party Parliamentarians in association with the clerks of the House of Commons. This would in effect remove the threat of 'no deal' should the Government's plan to reach a consensus fail. In effect, the Bill would create a parliamentary power to withdraw the Article 50 notice should parliament fail to reach agreement on a deal. This will be debated on Monday as part of the Government motion and will create an insurance policy backstop. Although a backbench measure, it is clear that this has Government tacit support.
A second referendum has been ruled out by the Prime Minister as an effective way forward - the objective is to rapidly end the uncertainty and coming to a negotiated agreement is the best way of achieving that.
Government's position is surmised as:
As we head in to the Christmas break, it is a welcome opportunity to pause, take stock, review the year which has just passed and look forward to the challenges to come. And it has been quite a year! 2018 will be remembered for a lot of things: the highs of the football, cricket – and let’s not forget the netball! - to the lows of the unprecedented economic turbulence which has hit our market.
We have had to navigate an unexpected and challenging landscape and it has been a time when speaking with one clear, loud, united voice has never been so important. This time last year, we were working hard to help politicians and the media understand our economic, social and cultural contribution and never has that investment, those hard yards been more important than this year.
The creation of UKHospitality meant that we have been able to make great advances in that regard, and we now find ourselves front and centre of the political debate, changing perceptions, earning the recognition and the profile the sector deserves. Creating one single, united voice representative of the whole sector has ensured that we have achieved not only a seat at the table but also ensured that our voice has not just been heard, it has been listened to, and we have seen real and meaningful action in response.
As I told guests at our Christmas Lunch, this has been a transformational year. For the first time, hospitality joined the five other major industrial sectors at briefings with the PM, Chancellor, No 10 and Treasury Business Councils. We have given evidence at 11 Select Committee sessions on Brexit, employment costs, business rates, regeneration, obesity and tourism tax. We attended 66 Ministerial meetings to press for changes in legislation. On top of which we participated in the Tourism and Food & Drink Industry Councils to shape the political environment in which we operate, the Mayoral Commissions on Food and Night Time Economy and weekly Brexit planning meetings; we have been right at the thick of it.
I know that there are still incredible challenges and headwinds faced by the sector – and the team here at UKH remain on the case – but our vital campaigning work has saved the sector an additional £2.4bn additional costs, that it would otherwise have had to find, if Ministers had not heard and listened. And it is the new, bigger organisation that has helped deliver those results.
Our message to Government is that we are a world class, world beating sector of growth champions. We are the third largest private sector employer and last year generated 1 in 8 of all new jobs, outperforming the economy, and investing in high streets and communities across the country. But that success cannot be taken for granted. We can only go on making that positive contribution if we tackle the regulatory costs and burdens which stand in our way. If the Government helps to create the optimum operating environment, we can do what we do best, and deliver our forecasts of up to 6% growth, 30,000 additional jobs and 200,000 apprenticeships.
Our immediate priority is to secure the right Brexit deal and migration policy to keep our teams supported. But we will not let pressure drop in our efforts to achieve our goals of an overall tax regime that promotes productivity and competitiveness and which incentivises investment in people and property. A tax regime that reduces employment taxes and allow us to invest in wage growth and training; and not forgetting an industrial strategy which put hospitality front and centre in the drive for growth, business support and investment.
For the year as a whole, the focus is on people. The single biggest achievement secured at the end of this year was the Government’s announcement of a Sector Deal for Tourism and Hospitality only the 7th sector to receive a deal. This is more than just symbolic; it is an explicit recognition of our importance to future economic development and a pledge to review barriers to growth and productivity and most importantly of all, an endorsement of the sector as a career of choice, delivering good quality jobs at all skill levels as we go through the 4th industrial strategy.
At the Christmas lunch, I reported on the successful development of the UKH Academy, which provides ‘Gold Standard’ learning in line with a wide range of apprenticeship standards, funded either through the apprenticeship levy or subsidised by the Government. The Academy also tailors learning for the employer to meet the needs of their business, while ensuring transferability of skills to equip learners for work across the sector.
At the end of an incredible but challenging year, I thank you, our members, for your support and commitment to UKH’s work. I am incredibly lucky to have a talented, hard-working and utterly committed team here at the UKH offices and I know that you will join with me to wish them a restful Christmas break, and a good recharge of their batteries for what will be another exciting year.
The past year has been a tangible demonstration of the message we are taking to Government about our potential and our contribution, which will be key to unlocking more of the policy asks we have in a post Brexit world. Thank you for being here and for your continued support.
With best wishes for a very happy Christmas and a prosperous New Year.
I attended a briefing at No 10 with the Prime Minister, Chancellor and Brexit Secretary on Monday evening on the outcome of the EU negotiations on Brexit. Slides from the meeting can be found here. A follow up DEFRA briefing with Michael Gove at No 10 will take place today. In summary the key points for hospitality are: a transition period until 31 December 2020 allowing free movement of workers up to that date and for anyone entering the country by that date a right to remain; a commitment to negotiate a future free trade agreement with no quotas, tariffs or customs checks from 1 Jan 2021; visa free travel for tourists, business travellers and those transferring within a multi-national business.
Post Brexit Migration
I have met with the Business Secretary, Small Business Minister, Culture Secretary, Tourism Minister, two Brexit Ministers and the Food Minister over the last three days to discuss the EU deal and progress no deal contingency planning. In each of these meetings, I have raised concerns around the immigration debate and the Government’s stated aim to “restrict low skilled migration” and apply the tier 2 tests on skills and salary to all workers post Brexit – we estimate that this would exclude 80-90% of hospitality staff. There are signs that this message is getting through – notably with the immigration white paper being delayed at the request of BEIS to review business concerns and a change in language from Monday to today towards prioritising higher skills, not preventing lower skilled migration and adopting a skills based approach according to economic need. We have been clear in meetings with Ministers that we cannot be more supportive while the language around low skilled workers and migration remains so negative.
Government backs Hospitality as Career of Choice
On Wednesday (27 November), the Government announced that Hospitality will be the 7th Sector Deal under its industrial strategy. This means that the Government is giving explicit backing to the sector as a key driver of economic growth, recognising it as one of the core pillars of future employment and, most importantly, backing a major campaign to make it a career of choice and a career for life. This will see financial support and active engagement in education and careers initiatives in schools as well as a new industry led recruitment and skills campaign. It is a key component in driving forward our campaign to change the perception of the industry and to promote its reputation as a place to invest, grow and develop. The fact that we are the 7th sector – out of 60 who were bidding – to get this backing is a testament to the galvanising force of the merger in changing the political dynamic and debate and gives us a solid bedrock for future campaigning. We welcomed this huge win for our sector in a statement which you can read here. To read the press release issued by DCMS please, click here.
On Wednesday 14 November 2018 the Cabinet approved the terms of our withdrawal from the EU and the outline future trading agreement. I subsequently had a call with No 10 on the detail and the team, and I have met with Ministers from BEIS and DEFRA. The following is a summary – the text of the outline deal has just been published and is available here, but the terms of the political declaration on the future trading relationship are not yet available. We will go through this with a fine-tooth comb to provide a more detailed briefing in due course.
The Chancellor described the Cabinet agreement as a ‘decisive step forward’ in agreeing in principle the terms of our orderly withdrawal from the EU and the broad terms of our future trading arrangement. We understand that there was not full Cabinet unanimity, and this morning Brexit Secretary Dominic Raab, Work and Pensions Secretary Esther McVey, Northern Ireland minister Shailesh Vara and Suella Braverman, junior Brexit secretary, resigned.
Full legal text (585 pages) has been agreed with the European Commission and guarantees EU citizens’ rights for those working in the UK - as per our previous briefing, any EU citizen entering before the end of the transition period would have a right to remain to gain settled status. There are new rights for tourists and visitors between the EU and UK to move without visa or additional checks.
Time limited implementation period agreed and confirmed – initially set to end 31 December 2020. This means all existing rights to work and trade will continue after we exit in March 2019. The implementation period will be used to work out the detail of the future trading relationship. The UK has a sole and sovereign right to extend the transitional period if we are not ready to move to the next stage of the new trading relationship – this is new text and is an alternative to entering the backstop. Crucially the UK alone can trigger this.
There is a legal commitment in the text that both sides will negotiate in good faith and use their best endeavours to deliver the principles of the future trading agreement which have been agreed today – namely a free trade agreement for goods with zero tariffs or quantitative restrictions; a level of alignment and degree of facilitation to secure as frictionless as possible, trade between the EU and UK and ensure, in particular, the smooth transfer of goods at Dover; a close relationship on services and investment which are specifically named as areas to be covered in the future trading relationship; sectoral cooperation in key areas such as fisheries, energy and security; consensus on a number of other issues to be included in the detailed negotiations.
The legal agreement on the future trading relationship can only be established once we have left, but the political declaration gives precise instructions to negotiators on what is to be included and covered, and the UK will continue to negotiate further detail on the political declaration text over the next two weeks.
Next steps – this is currently a deal between the UK and the European Commission negotiating team. It will now be presented to other EU leaders at a special European Council on 25th November when all 27 heads of state must endorse it, and when the final political declaration on the future trading relationship and free trade agreement will be concluded. Negotiations and detail on this will continue right up until 25th November and if the EU Council approves the deal, Article 50 negotiations will be brought to an end and the deal presented to Parliament. Anticipation is that the Parliamentary debate will be held immediately after 25th November and a meaningful vote will take place in early December for MPs to back or reject the proposals.
The Prime Minister has presented the choices as being this deal, no deal or even no Brexit at all, and Ministers said they were confident of getting support; but the Parliamentary arithmetic still looks questionable and the deal could still be voted down in December. Should this happen we would be heading to no deal contingency planning.
In light of the importance of a deal for securing a transitional period and underpinning business planning and investment, and, as well as securing the supply chain, we will therefore be working with other business groups and stakeholders to support the Government’s approach. The summary text of the withdrawal agreement and political declaration seem to address the majority of our immediate concerns and the trajectory towards a smooth and orderly Brexit is very welcome. This is inevitably a compromise, but this is a positive and pragmatic set of proposals which protects jobs and the supply chain, and as such is better than the alternative of a no deal or disorderly Brexit.
As the Chancellor sat down after delivering his Budget Statement, the general feeling in the UKH office was that this was a positive Budget with three of our four main pillars delivered on; recognising and acknowledging our core campaigns around employment costs, business rates and digital paying its fair share – together with a positive outcome on excise duty, latte levy and non-residential capex and investment allowances. We estimate the measures announced in the Budget as a result of our campaigns are likely to save the trade £750m.
On Sunday’s media rounds, the Chancellor stated that his Budget was predicated on a Brexit deal being struck. His comments today drew back a little, focusing on specific spending proposals standing whatever the outcome of pursuits for a Brexit deal. A ‘no deal’ scenario would mean an emergency Budget and, while none of us want to see that, it would give us further lobbying opportunities.
As you may be aware, the Prime Minister gave an update briefing to business leaders and trade bodies on Friday evening, on the outcome of the EU Council meeting and Brexit negotiations. For the first time, hospitality was included and I was able to press the PM on the sectors concerns about migration and food supply.
The briefing concluded with several participants asking what more business could do to help and the PM responding that it would be helpful if more businesses voices publicly expressed support for the proposed EU/UK joint customs partnership and highlighted importance of frictionless trade with their MPs.
On Tuesday, UKHospitality hosted its first Hospitality Day in Parliament, providing an opportunity for the industry to speak with MPs about the barriers our sector currently faces, and to highlight the immense contribution our industry makes to local communities and the UK as a whole.
We will be following up with the MPs who attended Hospitality Day to ask them to schedule Parliamentary Questions, make representations to their party leaders, and arrange for debates in the House of Commons to urge government action and advocate for the industry.
If you would like to discuss any aspect of the day in more detail please get in touch with the UKH Team. I also encourage you to join our members engagement meetings, which you can read more about below.
With the summer drawing to a close, I would like to take this opportunity to provide you with an update on the work UKH has been doing following a busy summer of campaigning activity.
UKH IN ACTION
We have been meeting regularly with Number 10, DCLG and Treasury to progress our solutions on key issues affecting the sector. We held a very positive round table with the Head of Business Liaison in No 10 who is the policy lead in retail, hospitality and tourism. She is one of a small team of influential civil servants who work closely with the PM to ensure business concerns are properly reflected and addressed at a central level.
We have maintained momentum throughout the summer on our three key political asks – depoliticise NLW, NIC cut and business rate reform. In addition, we have secured a new government inquiry into the future of the high street and a seaside towns inquiry. You can read more about this and other policy issues below.
We have had several meetings over July and August with Ministers in the Brexit Department, Home Office and DEFRA to continue to push for a migration policy which meets hospitality’s needs. These have been positive and in particular have resulted in commitments from the Government to guarantee the rights of existing EU workers, even in the event of a no deal. We were a co-signatory to a detailed submission made by CBI and other trade bodies calling for effective freedom of movement post December 2020 in return for a favourable trade deal. This was reflected in the Chequers agreement.
Last week saw a blow to hospitality businesses with the release of the Migration Advisory Committee’s report into EEA migration in the UK. The report acknowledged that there would be no way to change the migration system without creating winners and losers and recommended the UK should focus on enabling higher-skilled migration coupled with a more restrictive policy on lower-skilled migration in the design of its post-Brexit system. We issued a warning that such a illogical stance would drive decline in hospitality workforce and undermine a major part of the UK economy. We will be making these points to the government, highlighting the dangers of a future immigration system that is disproportionately restrictive towards lower-skilled workers. UKHospitality has produced a briefing document, which you can read here.
Employment Costs, NLW and NIC
We have had meetings with backbench MPs to push our proposal to increase the NIC threshold to lift the lowest paid out of tax and to allow employers to invest in their teams. This has been favourably received by Conservative think tanks and central office policy and is being taken forward through No 10 and in our Budget submission. I raised both the NICs and NLW issues during the Workforce Commission launch event which was attended by MPs.
Business Rates/High Street
MPLC – a licensing body representing movie studios and TV production companies – have contacted UKH to attempt to exercise their legal right to impose a tariff on televisions in accommodation providing venues. This will potentially introduce considerable costs for hotels, hostels and other accommodation providers. UKH has been in contact with a range of members, the Intellectual Property Office and other trade bodies and will be meeting MPLC next month to discuss the next stages of the process.
We love it when you get involved and strongly encourage all our retail operator members to sign up to our member engagement meetings.
Dusk 'Til Dawn Monday - 8th OctoberFollowing the Bar & Nightclub Conference, UKHospitality will be hosting the Dusk ‘til Dawn awards. The Late Night Awards are awarded to the most exciting and innovative businesses across marketing, drink and food offer, entertainment, service and team and overall quality in the UK's late night sector.
Operations Managers Awards - Monday 15th OctoberThe Operations Manager Awards is a key date for your diary where the industry unites together to celebrate the exceptional talent within our sector.
Join us for the evening an enjoy the awards, an interview with industry guru Kris Gumbrell and networking industry and future leaders.
Hospitality Day in Parliament - Tuesday 9th OctoberUKHospitality invites members to join us at Parliament to meet with MPs and ensure they understand our issues and objectives, while celebrating the importance of the sector.
Making Tax Digital - Wednesday 10th October
There will be new legislation that will affect your business from 1 April 2019 in respect of Making Tax Digital which will change how you submit your VAT returns going forward. Joins us and our partner KPMG for a breakfast seminar as we discuss the impact on your business and what actions you need to take
Christmas Lunch - Thursday 20th DecemberUKHospitality is excited to carry on the 23-year tradition of the annual Christmas Lunch; an opportunity to celebrate the year's accomplishments, network with colleagues and mark the end of another successful year. Open to all UKHospitality members, the Christmas Lunch will bring together 1,200 industry leaders at Old Billingsgate , London.
Alpine Tour - 12-19 January 2019
UKHospitality is continuing with the ALMR 13-year tradition of the annual ski trip, and will be hosted at the Italian resort of Cortina d’Ampezzo. The ski trip has a reputation of being a must attend event, providing the perfect opportunity for networking with like-minded operators and suppliers.
Since I took over as the Chief Executive of UKHospitality (UKH) at the end of April, I have been out and about at meetings with as many members as possible to hear member concerns and aspirations, to help shape the future direction of our trade body and our campaigning.
OUR MISSION AND VISION