Thursday 20 May 2021 / 10:30 PM Seema Malhotra

Labour tells Ministers they cannot expect indebted businesses to simply “bounce back” as economic impact of Covid on tourism industry is laid bare

Labour tells Ministers they cannot expect indebted businesses to simply “bounce back” as economic impact of Covid on tourism industry is laid bare   

 

New analysis by Labour has revealed the stark impact of the Covid crisis on the UK’s tourism destinations, with a disproportionate rise in people claiming out of work benefits in these areas – and businesses in the industry still saddled with debt.

 

During the Covid crisis, there was on average a rise of 150% in people claiming out of work benefits in the 20 areas with the highest proportion of tourism jobs – a huge 38% higher than the UK average.

 

Those 20 places include popular tourist destinations like Whitby, Penzance and Fort William, with tourism directly supporting at least one job in four in all these areas. Kendal in the Lake District saw a 200% rise in those claiming out of work benefits – 1,045 additional people compared to before the coronavirus outbreak.

 

Labour is warning that Ministers cannot simply expect businesses to “bounce back” as restrictions ease, because the amount of debt taken on to stay afloat means they face an uphill battle to return to profitability.

 

The latest figures show accommodation and food service businesses across the country are in more than £6 billion of debt, while arts, entertainment and recreation businesses including tourist attractions like zoos and theme parks are facing a bill of almost £1.5 billion.

 

And the latest ONS Business Impact of Covid Survey, released on Thursday, shows more than one in ten hospitality and accommodation businesses has low or no confidence it will survive the next three months; and one in five hospitality businesses said they are at moderate risk of insolvency.

 

Seema Malhotra MP, Labour’s Shadow Minister for Business and Consumers, said:  

 

“Businesses and workers have done the right thing during this crisis in the most difficult of circumstances, and these figures suggest those working in the tourism industry have been hit particularly hard.

 

“While the vaccine rollout and roadmap to reopening is good news for businesses, it’s clear that Ministers should not expect businesses saddled with debt taken on to survive the crisis to simply bounce back. It is far from job done.

 

“The Government must provide businesses with a fair repayment scheme based on the amount they’re making, or risk more people falling out of work and further damage to local economies reliant on trade from tourists.

 

“Labour would do the right thing for businesses and support them so they can deal with the challenges they face. Failure to do so would be morally wrong and economically illiterate.”