Why Home Office visa plans will be ‘nail in the coffin’ for UK hospitality

UK hospitality: What do you call an Italian restaurant that doesn’t serve pizza? During the 2022 Edinburgh Fringe, Gusto’s restaurant in the city sounded like the punchline to one of the comedy festival’s jokes.

Pizza wasn’t on the menu at the Italian restaurant because it had no maestro to wield the pala, the long-handled tray used to ferry the dough in and out of the kitchen’s searing-hot oven.

“The fringe is our busiest month in Edinburgh but we had to close two days a week and couldn’t sell pizza,” says Gusto’s chief executive, Matt Snell. “Pizza chef is a skilled job and we could not find one. Our sales were a third of what they would normally have been.”

Closures linked to staff shortages cost the business £750,000 that year.

Salvation – the “gamechanger”, according to Snell – arrived when he realised that the 14-strong restaurant chain could tap into the government’s skilled-worker visa scheme. On the proviso that Gusto could show recruiting domestically was impossible, the company could pay the government £3,000 a time for a licence to hire chefs from overseas on a temporary visa.

Bravissimo, staff shortage solved.

“In the last 18 months we have recruited 30 chefs and have spent over £200,000 on this project,” says Snell. “It has been the difference between keeping restaurants open or closed.”

That lifeline – and the pizza – is now under threat from a Conservative government policy that many in hospitality feel prioritises political calculation over economic realism.

Under plans to cut migration by 300,000 a year, the minimum salary requirement for a skilled worker visa will increase from £26,200 to £38,700 from April. The same salary threshold will apply to anyone, including British citizens, who wants to bring family members to the UK, although this has been delayed to 2025 after a government U-turn prompted by widespread dismay.

These policy changes could have a chilling effect on an industry still reeling from Covid, rampant inflation and the resulting cost of living crisis, businesses fear. What’s more, the government made its decision, according to the trade body UK Hospitality, without any consultation with the industry.

The organisation, which represents firms running 100,000 hospitality venues, has written to the Home Office laying out some of its concerns. These include the fact that 95% of the 8,500 migrant workers recruited last year would be ineligible for a visa under the new thresholds.

With migrants accounting for about 15% of the sector’s workforce, shutting them out altogether would only intensify the frenzied battle to find staff. The job vacancy rate in the sector is already high at 8% – about 120,000 roles unfilled – and the shortfall rises to as much as 10% for head chefs and 21% for production chefs, the worker bees who keep dishes flowing in high-volume kitchens and factories.

In areas such as Cumbria, sparsely populated but with a high tourist count, shortages are even more acute. Businesses in the Lake District are “frustrated and angry” with the government’s plans, according to Gillian Haigh, managing director of Cumbria Tourism.

“It’s come out of the blue that they would think increasing the salary threshold could do anything other than heighten the extreme labour supply crisis,” she says. “What are businesses meant to do? Some are saying there are parts of their business they won’t be able to run, or they can’t run it at all.”

Kate Nicholls, chief executive of UK Hospitality, highlights the risk not just of losing out on the regular flow of staff into Britain’s hotels, restaurants and bars but the extra competition with other sectors facing the same problem. “There’s an economy-wide shortage of labour. They [migrant workers] are a vital and important component and crucially they are plugging a gap.”

In theory, the result could be that hospitality businesses are incentivised to pay higher wages, which would then be earned by domestically sourced employees. But the reality is that even when wages rise, the supply of skilled staff simply isn’t there.

Nicholls points to a demographic “timebomb” that struck in 2020, when slower birth rates from the years around the millennium led to a drop in the number of 18- to 24-year-olds coming into the workforce.

Covid shut down the talent pipeline coming through catering colleges, or led to staff taking jobs elsewhere when pubs, bars, restaurants and hotels closed their doors.

“Amazon warehouses took a lot of our staff during lockdown,” says Snell. “They could walk straight into it and it was paying similar levels. People didn’t come back to the industry.”

So painful was the recruitment headache that when he advertised for a head chef in Birmingham, on a very competitive rate of £37,000, he woke up the next morning to find rival restaurants outbidding him for the same staff at £40,000.

The economics simply didn’t make sense in an industry where margins are already wafer-thin.

There’s a threshold at which it becomes impossible to make money, so you have to put prices up, which drives inflation, which flies in the face of what the government say they’re trying to do,” says Snell.

Even if he could pay more, Snell isn’t confident that he would find the skilled workers needed.

The government’s new migration policy will only exacerbate the problem, he says, leading to rising restaurant closures and a fall-off in VAT receipts paid to the exchequer.

“The Tories have got themselves so wrapped up in this ‘stop the boats’ thing, that immigration is everything, that they’ve decided to clamp down without really understanding the effect it will have on different industries,” he says. “This is just another nail in the coffin of the hospitality industry.”

It isn’t just businesses that could suffer, of course, but people, and the people who love them.

Maria and her husband, Nasir, whose names have been changed to protect their identity, secured their first spouse visa last year, at a cost of nearly £5,000, not including English tests and document translation.

“We have settled in rented accommodation and both have jobs. We have only ever put money into the UK,” says Maria. “It is devastating to find that although combining income we may just scrape past the new income requirement.

“The ruling effectively prohibits us from starting a family. I am self-employed and if I became pregnant and had to take time off work, we would fall below the threshold and my husband could be kicked out.

“I would have to choose between living as a single parent in the UK and taking my child away from their father, or leaving everything I’ve worked for here to join my husband in another country.”

Asked about the potential impact of the changes on the hospitality sector, a Home Office spokesperson referred the Guardian to an online factsheet.

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