Half of businesses have operating costs exceeding turnover according to ONS survey
The ONS’ Business Impact of Covid-19 survey published today reports 49% of businesses surveyed currently have operating costs exceeding turnover, suggesting almost half of businesses are at risk of going bust.
In a shocking indictment of the Government’s Kickstart Scheme, 97% of businesses surveyed did not plan to apply for the scheme.
The fortnightly business survey captures businesses’ responses on how their turnover, workforce prices, trade and business resilience have been affected over a two week period, this time 21 September – 4 October.
- 40% of accommodation and food services businesses said their operating costs were exceeding turnover.
- 49.1% of businesses across all industries said their operating costs were exceeding turnover.
- 54% of accommodation and food services businesses said they do not intend to use the Coronavirus Job Retention Scheme in the next two weeks, despite 24% of their staff being on partial furlough, suggesting many of these people will lose their jobs.
- Only 3.3% of businesses intend to apply for the Kickstart scheme.
- 25.7% of accommodation and food services businesses, and 20% of all businesses, said they only expected their cash reserves to last for another 1-3 months. 6.7% of accommodation and food services businesses said they have no cash reserves remaining.
- 17.3% of accommodation and food services businesses said they are at severe risk of insolvency, and 21% at moderate risk. Across all industries, 4.7% of businesses said they were at severe risk of insolvency and 13% at moderate risk.
- 33% of arts, entertainment and recreation businesses said their turnover had decreased by more than 50% and 21% by more than 20%.
- 22% of accommodation and food services businesses said their turnover had decreased by more than 50% and 28% by more than 20%.
Lucy Powell MP, Labour’s Shadow Business and Consumers Minister, said:
“This survey provides a bleak snapshot of the situation facing many businesses across the country.
“Despite the Chancellor’s rhetoric, with more on the way today, the reality is clear – businesses are struggling to survive and people are losing their jobs. The Kickstart scheme won’t help kickstart anything, with only 3% of businesses saying they’ll apply for it.
“Labour is on the side of business, and we’ve have been calling for Ministers to give them the proper economic support and access to the cash grants they need to stay afloat and protect jobs this winter. Without that, the numbers in these surveys are just going to get worse and worse.”