£50m furlough bill on the way to closed or seriously struggling businesses
New analysis by the Labour Party has revealed the £50m bill Ministers are forcing struggling businesses to pay in July, despite the serious impact upon them of ongoing restrictions. From 1 July, all businesses including in sectors hardest hit by restrictions will be forced to contribute 10% towards the cost of furloughing employees. Ministers have refused to push back this date in tandem with the delay to the roadmap – meaning businesses forced to pay will include those still legally closed or operating at a significantly reduced capacity.
In just a couple of weeks, employers will therefore face a choice between paying £122.80 on average per every employee whose job they want to protect, or removing staff from the payroll. That includes businesses still unable to open like night clubs and live music venues, as well as those facing huge financial difficulties in light of ongoing restrictions including travel agents and airlines, events spaces, pubs and bars, and businesses in the wedding industry.
On 1 July, Ministers will also begin withdrawing the 100% business rates relief for retail, hospitality and leisure businesses. That means businesses will have to contribute 34% towards their monthly business rates irrespective of their trading status. The average night club will have to pay £718 in July, the average bar will have to pay £500, the average restaurant will have to pay £598, and the average theatre will have to pay £1,048.
Labour has called on the Government to:
- Delay the increased employer contribution to furlough, given that most of people remaining on furlough are employed in the sectors affected by the ongoing restrictions – hospitality, live events, accommodation and tourism.
- On business rates relief, learn lessons from the Labour-led Welsh government, which has given the vast majority of businesses 100% business rate relief for the course of this financial year. In contrast, the Conservative government is sending out bills to businesses that cannot fully open.
Shadow Business Secretary Ed Miliband said:
“Businesses have done right by our country during this crisis and the Government must do right by them. But Ministers have repeatedly failed to grasp the simple principle that public health restrictions must be matched by fair economic measures.
“A month’s delay may seem like a short time, but for businesses legally closed from trading or those hanging on by their fingertips from going under and relying on the summer season the delay is another blow. That businesses unable to reopen are being sent huge bills defies logic. Unless Ministers take action, we risk pushing more firms over the edge.”