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Source: Labour Party UK

Labour condemns ‘smash and grab raid’ on struggling businesses: Over £1 billion being clawed back by Government  – including £340 million in areas with local restrictions – despite businesses facing a fight for survival

  • Local authorities must hand back £1.3 billion of unspent emergency grants to the Government despite public health restrictions being reimposed
  • This includes £340 million being clawed back from areassubject to local restrictions where businesses have been hit hardest
  • Labour issues fresh call for government to redeploy the remaining grants funding as a Hospitality and High Street Fightback Fund to help save jobs and businesses

The Labour Party has today condemned a ‘smash and grab raid’ on struggling businesses, and demanded Business Secretary Alok Sharma stand up for businesses, as analysis reveals that over £1 billion of funding allocated to support businesses through the pandemic – including £340 million in areas facing local restrictions –  is being clawed back by the government despite restrictions being reimposed.

At the start of the first national lockdown, Ministers made funding available for local authorities to support small businesses and those in the hospitality, leisure and retail industries, to help them stay afloat as they closed to help tackle the virus.

This fund operated on a ‘use it or lose it’ basis, with the provision that it would need to be spent by 30 August or handed back. But despite many areas now facing local restrictions, and warnings that half a million jobs could be lost in the hospitality industry alone before Christmas, Ministers are still forcing councils to return any cash they haven’t yet used.

Labour argues that businesses across the country are currently in a fight for survival and should still be able to access these funds:

  • Businesses face the furlough cliff edge which will further squeeze already tight cash-flow and encourage redundancies. Nearly a third of workers in the accommodation and food services industries remain on furlough. This rises to 4 in 10 employees in the arts, entertainment and recreation sectors;
  • Businesses that make up the night-time economy have been hit hard. A recent survey by the Night-Time Industries Association found that almost half (45 per-cent) of businesses would be making 60 per-cent of staff redundant, as a result of current restrictions, and being labelled ‘unviable’ in the Winter Economic Plan;
  • Businesses in areassubject to local restrictions face reduced demand as social gatherings are either discouraged or not allowed. The government’s offer of economic support to these areas has been slow and inconsistent, and the grant scheme it has belatedly set up would not cover a small business’s costs of employing one worker on minimum wage for the duration of the restrictions. No area qualifies for this grant because of the current restrictions in place.

Labour is today issuing a fresh call for government to redeploy the remaining business grants funding as a Hospitality and High Streets Fightback Fund, to save jobs and businesses now, and help them survive through the bleak winter period.

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

“Businesses are in a fight for survival. The Business Secretary must stand up to the Treasury and demand they reverse this smash and grab raid on business support or risk the decimation of our high streets. It makes zero sense to remove economic support while public health restrictions are tightening.

“It’s now clear that some places and some businesses are going to be acutely hard hit over a longer period than was first thought. Rather than clawing remaining funds back, the government should redeploy these funds and allow local areas to use them flexibly to support those businesses and town centres hardest hit, before we see waves of redundancies, shuttered high streets and viable businesses going bust.”

MIL OSI United Kingdom