More than a third of hospitality businesses – an estimated 650,000 – fear collapse in the next three months, it has been revealed, amidst reports of the current lockdown lasting until May.
New analysis underlines the cash crisis firms on the high street face, with more than a million food services and accommodation businesses saying they have less than 3 months of cash reserves, and Labour showing that grants for many firms forced to close will be worth half as much as in the March lockdown.
Labour has accused the Government of “economic negligence” if it fails to act – and is calling on the Business Secretary to “be the voice of business, not a mouthpiece for the Treasury” and back businesses in England by urgently outlining how he will support struggling hospitality and leisure businesses to survive the crisis.
Government advisers have recently suggested that businesses including hotels, pubs, hairdressers and beauty salons may remain closed for another three months to help tackle the spread of the virus, but there has been no update from Ministers on the economic support available since 5 January.
Under the current economic offer, the average hospitality or leisure business would receive £11,000 less during the third lockdown than it did during the first – despite being in a significantly worse financial position now.
Analysis by the Labour Party based on the latest ONS survey data suggests that more than 54,000 hairdressing and beauty businesses and more than 650,000 accommodation and food services businesses have little confidence they will avoid collapse, and more than a million will run out of cash reserves in the next three months.
Lucy Powell MP, Labour’s Shadow Minister for Business and Consumers, said:
“The Business Secretary needs to stand up for businesses in government not stand back and leave them to go bust. It’s his job to be their strong voice, not a Treasury mouthpiece.
“A million firms are struggling with a cash crisis threatening jobs and livelihoods just as the vaccine offers hope. The cost of business insolvencies and unemployment on this scale would take a wrecking-ball to our economy.
“If the Government fails to act on this latest evidence, and doesn’t bring forward an urgent, comprehensive plan, they’ll be guilty of economic negligence that will choke off the recovery, and damage our country for years to come.”