Ministers must end “text for access” system and address £62 billion debt burden facing businesses – Labour
Following the news that Boris Johnson “fixed” a tax issue for James Dyson after being texted directly and news that Rishi Sunak “pushed” his officials to try secure a loan for Greensill following texts from David Cameron, Labour is calling on the Government to stop giving friends a priority pass – and instead address the £62 billion debt burden facing businesses.
Labour has proposed that businesses be given more flexible options to repay debt taken on to stay afloat during the Covid crisis, including through student loan style arrangements linked to profitability – that will see businesses only begin to repay once they are out of the red and back on their feet.
The hospitality industry alone is still facing around £6 billion in debt and one in 10 hospitality businesses has low or no confidence it will be able to meet its current debt obligations.
The latest ‘Business Impact of Covid Survey’ revealed that 16 per cent of hospitality businesses have low or no confidence they will survive the next three months, and one in ten businesses of all kinds across the UK is at moderate risk of insolvency.
The latest figures reveal the shadow of debt hanging over businesses which Labour is calling on Government to ease through flexible repayment options:
- Businesses across all sectors face a huge £62 billion debt mountain.
- Accommodation and food service businesses, including pubs and restaurants trying to get back on their feet after opening for outdoor service, will face an uphill battle to return to profitability without government action as they are in more than £6 billion of debt.
- Arts, entertainment and recreation businesses are almost £1.5 billion in debt. While outdoor recreation businesses like zoos and theme parks recently reopened, many more arts and entertainment businesses are still legally closed.
- Retail is one of the most indebted sectors with around £11 billion in debt, threatening the future of our high streets.
Ed Miliband MP, Labour’s Shadow Business Secretary said:
“It’s time Ministers stood up for businesses in this country, even if they don’t have the Prime Minister’s mobile number. The path to recovery will be long and difficult for many businesses, and a big challenge facing these firms is the debt overhang built up to keep themselves afloat in the crisis.
“The Government has refused to introduce the kind of flexibility these businesses need, yet Ministers have acted quickly and flexibly to address issues raised by their personal connections. Rather than fast-tracking the concerns of their friends, Ministers should be listening to businesses of all sizes across the country struggling to deal with debt.
“Forcing businesses to repay debt while they are still in the red makes no economic sense. The Government must give our businesses the time to get back on their feet by linking repayments to profits, or risk businesses going to the wall and taking their debt with them – threatening many good businesses and inflicting further damage on our high streets.”