The failure of government to ensure that emergency economic support is in line with emergency public health restrictions could threaten thousands of jobs and businesses in areas with new local restrictions, Labour has warned. 

New analysis by the Party reveals that there is a £170 million underspend in the government’s Covid-19 grants programme for businesses in areas with local restrictions yet Ministers are insistent on clawing this back, rather than using it to further safeguard jobs and livelihoods. Labour estimates that this funding could support an additional 15,000 businesses in areas with local restrictions as part of the Party’s proposed Hospitality and High Streets Fightback Fund.

Labour has proposed that the gap between what the Government has allocated to local authorities in retail, hospitality and leisure grants, and the amount of cash that has been distributed to businesses be repurposed as a Hospitality and High Streets Fightback Fund to protect jobs and help struggling firms. If Ministers allowed local areas to use the underspend in the coronavirus business grants schemes, this would unlock significant funds for local areas to target flexibly at local need.

Businesses in Greater Manchester and Lancashire face limits on their businesses as a result of new public health measures introduced by Ministers which limit contact between households, and discourage people from visiting high streets in villages, towns and city centres across the North. Many businesses including beauty salons, wedding planners and vendors, bowling, nightclubs and casinos remain fully or partially closed. 

With consumer confidence low, and hospitality, retail and leisure businesses hit by fresh local restrictions Labour argues economic measures must to go in tandem with public health measures.

The Party argues that Ministers should give councils more flexibility to spend the remaining unallocated funding they have received from the Treasury to tailor support for their local economies and better focus funds on struggling businesses and their supply chains – including bed and breakfasts, hotels and cafes in coastal communities; conference centres and music venues in towns and cities, or food and drink distributors, outside caterers, or food services industry in the supply chain.

Analysis of business survey data by Labour with the House of Commons Library estimates that there are over 334,500 jobs in retail and hospitality businesses in areas with local restrictions. The Party is warning that unless the government relaxes the rules around its grants schemes thousands of these jobs are at risk. This week we have already seen an acceleration of jobs losses across the high street, with thousands of redundancies at DW Sports, Pizza Express, Hays Travel and WH Smith.

As well as calling for a Fightback fund, Labour wants the Government to end the ‘one size fits all’ approach to unwinding furlough, and instead make sure support is targeted to those areas and sectors that have been hardest hit and are most in need.

Labour’s Shadow Minister for Business and Consumers Lucy Powell MP said: 

“It’s a week since local restrictions were put in place in Greater Manchester, and Lancashire yet there has been zero extra support for struggling businesses caught up in this public health crisis. 

“We’re seeing a wave of redundancies across the high street, threatening jobs and livelihoods, which could lead to ghost towns, as businesses are forced to shut up shop. Unless Ministers take action to provide extra help to firms, that wave will turn into a tsunami leading to lasting damage, and the loss of many thousands of jobs, weakening our economy and our ability to recover from the crisis.” 


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