Saturday 22 August 2020 / 10:30 PM Business / Lucy Powell

Labour warns of ‘shuttered streets, and jobs meltdown’ in renewed call for fightback fund to save businesses and livelihoods

Labour warns of ‘shuttered streets, and jobs meltdown’ in renewed call for fightback fund to save businesses and livelihoods

  • New analysis reveals 115,000 businesses could get more help if Ministers relax grants rules
  • Figures show £1.41 billion underspend due to be clawed back by Treasury in a week, unless government changes tack

The Labour Party today urges Ministers to change tack and save communities from ‘shuttered streets’ as new analysis shows that 115,000 businesses in distress could get help from a Hospitality and High Street Fightback Fund.

With waves of job losses across hospitality and the high street, Labour is urging Ministers to free up local authorities to use the grants underspend in their area to support their local economies and businesses in distress.

If Ministers allowed local areas to use the underspend in the coronavirus business grants schemes, this would unlock significant funds that could be targeted flexibly where it was most needed. Instead, Business Secretary Alok Sharma has written to Councils telling them to return any unspent funds in just one week.

While some businesses are open and trading well, many more are trading well below capacity, with high fixed costs, and very little cash coming in. Alongside this, businesses now have to contribute to the furlough scheme, squeezing already tight cash-flow.

The call comes as analysis shows that:

  • Footfall for high street businesses is still down 33 per cent on pre-pandemic levels.
  • Thousands of jobs losses are being announced every week across retail and hospitality.
  • Over 80,000 businesses have received no help from grants funds because of the restrictive rules placed on the funds by Ministers.

The Hospitality and High Street Fightback Fund is a key part of Labour’s ‘Jobs, Jobs, Jobs’ campaign, which urges the government to adopt a five point plan to save jobs now. Last month, Labour called for the £1.7bn underspend to be turned into a Hospitality and High Streets Fightback Fund, with restrictions eased so that more businesses could access the funding they need. Since then, nearly £300m of that money has been spent and £1.41bn remains untouched. Now the Business Secretary says he wants it back. That can’t be right when so many firms are still struggling.

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

“With the UK now in recession, Ministers must do all they can to stave off disaster on the high street. They have a week to change tack, and prevent shuttered high streets and a jobs meltdown. Rather than claw back these funds, Ministers should back the high street and save jobs now.

“Many businesses are still in distress, with many still fully or partially shut down because of the continuing public health emergency. It’s vital that the government doesn’t think it’s job done when so many jobs and businesses are on the line.”

Ends

Notes to Editors

Labour’s Hospitality and High Street Fightback Fund

Government grants data shows the number of business premises helped nationally, and in each council area, with the amount of premises identified as in scope, grant funding initially awarded and allocated, and the number of businesses helped. From this we can work out the underspend locally in each council area, regionally and nationally.

Of the initial £12.3 billion allocated, £10.9 billion has been allocated, leaving an underspend of £1.4 billion.

 

 

Region Initial Allocation Number of grant payments made to hereditaments as at 16 Aug Value of payments (£) Average payment Amount of grants underspend Estimated number of extra grants  
England £12,333,504,000 889,809 £10,916,940,000 £12,268.86 £1,416,564,000 115460
           
East Midlands £1,015,224,000 76,646 £897,800,000 £11,713.59 £117,424,000 10025
East of England £1,361,474,000 96,487 £1,176,205,000 £12,190.30 £185,269,000 15198
London £1,662,360,000 107888 £1,590,095,000 £14,738.39 £72,265,000 4903
North East £562,132,000 43,814 £503,765,000 £11,497.81 £58,367,000 5076
North West £1,761,880,000 129,647 £1,512,890,000 £11,669.30 £248,990,000 21337
South East £1,805,964,000 126501 £1,599,135,000 £12,641.28 £206,829,000 16361
South West £1,588,476,000 114,246 £1,358,670,000 £11,892.50 £229,806,000 19324
West Midlands £1,242,010,000 92,516 £1,093,325,000 £11,817.69 £148,685,000 12582
Yorkshire and the Humber £1,333,984,000 102,064 £1,185,055,000 £11,610.90 £148,929,000 12827
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/910182/200817-local-authority-grant-payments.csv/preview

 

The table above shows the average amount each businesses in England has been given through the business grants schemes. Using this average grant amount, we calculate a further 115,000 grants to businesses of this average amount could be allocated by local authorities using the underspend.

Local authorities are restricted on the type of businesses they can help in their area. Labour is arguing that these restrictions should be lifted, so local councils can better target support at struggling firms, and their supply chains. The funding should also continue past August when it will be clawed back, because the public health emergency continues, and grants support should be in lockstep with these.

Drop in high street footfall affecting retail and hospitality businesses

  • Since the start of the pandemic, Google has released weekly reports tracking movement across different categories of location using Google Maps and other mobile apps. It compares this movement to a pre-pandemic baseline from January and February. The reports provide a useful and timely insight into patterns of economic activity and how they differ to pre-pandemic levels. The reports have been used by analysts and policymakers as a useful tool for tracking the recovery across a number of sectors (the Financial Times, for instance, includes the data as part of its Covid recovery tracker)

Google mobility report, https://www.gstatic.com/covid19/mobility/2020-08-15_GB_Mobility_Report_en-GB.pdf

July 2020, https://www.ft.com/content/272354f2-f970-4ae4-a8ae-848c4baf8f4a

  • Data for 9th August shows footfall for retail and recreation locations down 33% on pre-pandemic levels. The data is also broken down by local authority.

https://www.gstatic.com/covid19/mobility/2020-08-15_GB_Mobility_Report_en-GB.pdf

Accelerating redundancies on the high street, hospitality and leisure  with more job losses every week:

DW Sports retail and leisure – https://www.bbc.com/news/business-53635211

Hospitality – the Guardian reports the loss of 17,000 jobs in restaurants in the last few months – https://www.theguardian.com/business/2020/aug/04/pizza-express-close-restaurants-jobs-staff-coronavirus

Debenhams announced 2500 job losses this week https://www.theguardian.com/business/2020/aug/11/debenhams-ready-to-cut-2500-jobs-in-new-blow-to-high-street

Marks and Spencer has announced 7000 job losses over the next 3 months. https://www.theguardian.com/business/2020/aug/18/coronavirus-marks-spencer-to-cut-7000-jobs-over-three-months

Retail, Hospitality and Leisure businesses missing out on support

  • Despite the Chancellor’s pledge to do “whatever it takes” to support business through the crisis, many companies in the hospitality sector and supply chains have received no extra help through grants because they have a rateable value above £51,000 which makes them ineligible.
  • These businesses are likely to be larger employers and the most productive businesses. They have some of the highest fixed costs but have received no help through government grants.
  • Data from the Valuations Office Agency supplied to the House of Commons Library for Lucy Powell MP shows that there are 83,290 retail, leisure and hospitality businesses with a rateable value above £51,000.
Number of Retail, leisure and hospitality hereditaments with a rateable value… Total number missing out
Below £51,000 £51,000 – £98,999 £99,000 – £148,999 £149,000 and above Total
TOTAL 689,190 38,670 16,360 28,260 83,290 772,480

 

Labour’s Jobs, Jobs, Jobs campaign features a five-point pledge with the aims of fighting for jobs, keeping workers safe and backing businesses:

  • Fight for jobs: by reforming the furlough scheme so that it supports jobs in the worst-hit sectors and targets aid to struggling industries.
  • Back our businesses: by setting up a fightback fund to prevent firms going under and save our high streets.
  • Leave no-one behind: by providing additional support to areas forced into local lockdowns, supporting the self-employed and helping those left out of existing schemes.
  • Keep workers safe: by protecting workers’ rights, boosting sick pay, making workplaces safe and giving our NHS and care services the resources to avoid a second wave.
  • Drive job creation: by investing in infrastructure, accelerating progress towards a zero-carbon economy and increasing access to skills and training opportunities.