Labour is today warning that businesses face a ‘triple whammy’
cash crisis in the critical run-up to Christmas trading, as new
analysis shows that non-food retail, hospitality, leisure and
cultural businesses and organisations across the UK have seen a
£61 billion hit to their takings so far this year compared to
2019.
Labour is warning that businesses face a cash crisis at the most
crucial time of year for many companies even as business costs
such as rent and overheads, loan repayments, and contributions to
the new furlough scheme mount up.
Analysis shows that:
- In the last year, UK businesses in shutdown sectors like
hospitality and leisure have so far seen turnover tumble by up to
half compared with 2019 figures;
- As the critical Christmas period approaches, billions of
pounds of turnover is at stake threatening business viability,
and jobs – non-food retailers take a fifth of turnover in the run
up to Christmas (£39 billion), twice as much as takings in
January and February;
- The situation for many businesses has worsened, even before
the second national lockdown. Businesses in accommodation and
food services, and those in arts, entertainment and leisure
report that turnover had fallen by 79 per-cent and 71 per-cent
compared to what is normally expected in October. 7 in 10 food
and accommodation services businesses also reported that their
profits were down by more than 20 per-cent over the same period
with nearly 4 in 10 down by more than half. Alongside this, 4 in
10 food and accommodation services businesses say that they
either have no cash reserves or they will only last 3 months
Labour is also pointing to the Chancellor’s ‘sleight of hand’ on
business grants during further lockdowns. declared he was introducing ‘bigger grants for
businesses’ with businesses eligible for up to £3000 per month in
grants, Labour can reveal that the vast majority of firms will
get much less than this.
Investigation of the business grants small print shows that:
- The Local Restrictions Support Grants launched by the
Chancellor for the second national lockdown are just a fraction
of what they were in March. The smallest rateable value
businesses will be eligible for just half of the weekly cash
amount they received in March, and businesses with a rateable
value between £15,000 and £51,000 will receive less than a third
of the weekly amount from the first lockdown.
- House of Commons analysis shows that 99 per-cent of hair and
beauty salons would receive less support than in March, 97
per-cent of betting shops, 95 per-cent of cafes, 92 per-cent of
gyms and 77 per-cent of pubs and restaurants.
- Alongside this, the Chancellor’s last-minute policies are
hurting firms. Businesses say that the government’s last minute
scrappage of the Job Retention Bonus will affect those who had
already priced it in. ONS survey data shows that nearly half of
businesses in the hospitality and leisure sectors were expecting
to access the Job Retention Bonus.
, Labour’s Shadow Minister for Business and
Consumers, said:
“The Coronavirus crunch has wiped billions of pounds off company
balance sheets and with the Chancellor’s sleight of hand on
business grants, many firms are now facing a cash crisis that has
his name all over it.
“The run up to Christmas is an absolutely critical time of year
for so many businesses on our high streets facing a triple whammy
of tumbling turnover, plummeting profits, and crumbling
confidence as a result of the government’s failure to tackle the
Coronavirus.
“Many companies are hanging on by their fingertips, if they are
left to go bust by the government, we’ll see a bleak mid-Winter
for many, and an avalanche of job losses.”
Ends
Notes to Editors
The House of Commons Library provided with the monthly turnover of hospitality, leisure
and retail service industries from January 2019 to the present.
The table below shows monthly, non-seasonally adjusted turnover
relating to Great Britain. The monthly data are early estimates
based on survey data.
The table below shows turnover for key shut down sectors
including non-essential retail.
|
Monthly business turnover: selected service industries
|
|
|
|
£ billion, current prices, non-seasonally adjusted, Great
Britain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
|
Accommodation
|
Food & beverage services
|
Creative, arts & entertainment
|
Museums, libraries & historic
attractions
|
Sports, amusement & recreation
|
Non food retail
|
TOTAL
|
|
|
|
|
|
Jan-19
|
1.8
|
5.66
|
0.82
|
0.13
|
2.06
|
11.63
|
22.1
|
|
|
|
Feb-19
|
1.91
|
5.7
|
0.79
|
0.15
|
1.92
|
11.67
|
22.14
|
|
|
|
Mar-19
|
2.19
|
6.42
|
0.86
|
0.17
|
2.25
|
15.35
|
27.24
|
|
|
|
Apr-19
|
2.3
|
6.33
|
0.82
|
0.23
|
2.24
|
12.89
|
24.81
|
|
|
|
May-19
|
2.48
|
6.71
|
0.81
|
0.24
|
2.32
|
12.89
|
25.45
|
|
|
|
Jun-19
|
2.78
|
6.53
|
0.91
|
0.24
|
2.26
|
16.56
|
29.28
|
|
|
|
Jul-19
|
2.93
|
6.86
|
0.91
|
0.26
|
2.28
|
13.48
|
26.72
|
|
|
|
Aug-19
|
2.89
|
6.71
|
0.76
|
0.3
|
2.47
|
13.04
|
26.17
|
|
|
|
Sep-19
|
2.72
|
6.25
|
0.78
|
0.19
|
2.26
|
16.15
|
28.35
|
|
|
|
TOTAL TO SEPT
|
22
|
57.17
|
7.46
|
1.91
|
20.06
|
123.66
|
232.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct-19
|
2.55
|
6.51
|
0.81
|
0.18
|
2.16
|
13.63
|
25.84
|
|
|
|
Nov-19
|
2.21
|
6.3
|
0.77
|
0.14
|
2.11
|
15.41
|
26.94
|
|
|
|
Dec-19
|
2.18
|
6.81
|
0.78
|
0.16
|
2.29
|
23.34
|
35.56
|
|
|
|
TOTAL 2019
|
28.94
|
76.79
|
9.82
|
2.39
|
26.62
|
176.04
|
320.60
|
|
|
|
Nov/Dec %
|
15
|
17
|
16
|
13
|
17
|
22
|
19.5
|
|
|
|
Nov/Dec turnover £
|
4
|
13
|
2
|
0
|
4
|
39
|
62.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan-20
|
1.78
|
5.7
|
0.8
|
0.13
|
2.25
|
14.72
|
25.38
|
|
|
|
Feb-20
|
1.93
|
5.69
|
0.76
|
0.12
|
2.05
|
11.63
|
22.18
|
|
|
|
Mar-20
|
1.18
|
4.32
|
0.73
|
0.1
|
1.73
|
12.21
|
20.27
|
|
|
|
Apr-20
|
0.27
|
0.69
|
0.44
|
0.09
|
0.98
|
5.86
|
8.33
|
|
|
|
May-20
|
0.23
|
1.03
|
0.27
|
0.07
|
0.9
|
7.56
|
10.06
|
|
|
|
Jun-20
|
0.31
|
1.8
|
0.27
|
0.09
|
1.19
|
13.68
|
17.34
|
|
|
|
Jul-20
|
1.23
|
3.71
|
0.31
|
0.16
|
1.72
|
12.74
|
19.87
|
|
|
|
Aug-20
|
2.04
|
5.32
|
0.31
|
0.21
|
1.69
|
12.55
|
22.12
|
|
|
|
Sep-20
|
1.84
|
4.95
|
0.33
|
0.15
|
1.68
|
16.25
|
25.20
|
|
|
|
TOTAL to SEPT
|
10.81
|
33.21
|
4.22
|
1.12
|
14.19
|
107.20
|
170.75
|
|
|
|
% 2019 vs 2020
|
-0.51
|
-0.42
|
-0.43
|
-0.41
|
-0.29
|
-0.13
|
-0.13
|
|
|
|
£ change 19 vs 20
|
11.19
|
23.96
|
3.24
|
0.79
|
5.87
|
16.46
|
61.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series
|
JQ34
|
JQ37
|
JSM2
|
JSM3
|
JR3K
|
|
|
|
|
Source: ONS, Monthly Business Survey turnover of services
industries, 12 November 2020
Note: Turnover for August does not include subsidy provided under
the Eat Out to Help Out Schem
Data from the Office for National Statistics’ Business Impact of
Coronavirus Survey Wave 17 which took place between the
19thOctober to 1st November. This survey
took place before the second National Lockdown. https://www.ons.gov.uk/economy/economicoutputandproductivity/output/datasets/businessimpactofcovid19surveybicsresults
Turnover: Businesses in the Accommodation and
Food Services sector and those in the Arts, Entertainment and
Leisure sector report that turnover had fallen by 79 per-cent and
71 per-cent respectively. These figures were an increase on the
previous two weeks.
|
Question: In the last two weeks, how has the coronavirus
(COVID-19) pandemic affected your business's turnover,
compared to what is normally expected for this time of
year?
|
|
Businesses currently trading, broken down by industry,
weighted by turnover, UK, 19 October to 1 November 2020
|
|
Industry
|
Turnover has decreased
|
|
Manufacturing
|
40.2%
|
|
Accommodation And Food Service Activities
|
79.2%
|
|
Arts, Entertainment And Recreation
|
71.5%
|
|
All Industries
|
49.5%
|
Profits: 70 per-cent of accommodation and food services
businesses have seen profits fall. 62 per-cent of arts,
entertainment and recreation industries have also seen profits
fall. Nearly 4 in 10 hospitality businesses have seen profits
fall by more than half.
|
Question: In the last two weeks, how has the coronavirus
(COVID-19) pandemic affected profits, compared with
normal expectations for this time of year?
|
|
Percentage of businesses currently trading, broken down
by industry, weighted by turnover, UK, 19 October to 1
November 2020
|
|
Industry
|
Profits have decreased
|
up to 20%
|
between 20% and 50%
|
more than 50%
|
|
Accommodation And Food Service Activities
|
72.5%
|
12.4%
|
21.5%
|
38.6%
|
|
Arts, Entertainment And Recreation
|
62.6%
|
14.3%
|
17.4%
|
30.9%
|
|
All Industries
|
46.5%
|
18.4%
|
13.2%
|
14.9%
|
Wave 16 of the Office for National Statistics’ (ONS’) Business
Impact of Coronavirus (COVID-19) Survey (BICS) shows that the
accommodation and food services industry have the highest
proportion of businesses with the least cash reserves.
|
Question: How long do you think your business's
cash reserves will last?
|
|
Businesses who have not permanently stopped
trading, broken down by industry, weighted by turnover,
UK, 19 October to 1 November 2020
|
|
|
|
|
|
|
Industry
|
No cash reserves
|
Less than 1 month
|
1 to 3 months
|
Less than 3 months
|
|
Accommodation And Food Service Activities
|
6.7%
|
9.5%
|
27.6%
|
37.1%
|
|
Arts, Entertainment And Recreation
|
4.9%
|
3.2%
|
24.9%
|
28.1%
|
|
All Industries
|
4.6%
|
3.8%
|
20.9%
|
24.7%
|
Business grants investigation
- House of Commons analysis of the proportion of rateable value
properties, by property type shows that the vast majority of
business shut down in the second lockdown will receive less
support than they did in March.
- Analysis by the House of Commons Library of the number and
proportion of premises with rateable values in the various bands
shows that the vast majority of locked down businesses in the
hospitality and leisure industries are in properties below
£51,000.
Business grants for the second lockdown
- The grants criteria are as follows:
- £1,334 per month for businesses whose property has a
rateable value of below £15,000.
- £2,000 per month for those whose property has a rateable
value of £15,000 or more but less than £51,000.
- £3,000 for firms whose property has a rateable value of
£51,000 or more.
https://www.gov.uk/guidance/check-if-your-business-is-eligible-for-a-coronavirus-grant-due-to-national-restrictions-for-closed-businesses
Business support grant comparison
- In the March lockdown retail, hospitality and leisure
businesses received a grant of £25,000. This was one-off support
which lasted until businesses were allowed to reopen 15 weeks
later. It equated to £1666.67 per week for businesses with a
rateable value below £51,000 and £15,000 or more. Businesses with
a rateable value of less than £15,000 could claim £10,000 which
equated to £666 per week for the same period.
- Under the new scheme, retail, hospitality and leisure
businesses whose property has a rateable value of £15,000 or more
but less than £51,000 (the majority of RHL businesses) can access
£2000 every 4 weeks they are closed. This equates to £500 per
week. Businesses with a rateable value of less than £15,000 can
access £1333 every 4 weeks they are closed equivalent to £333 per
week.
- Whilst the government has also announced funding for the
Additional Restrictions Grant, it is unclear who will benefit
from this as national guidance has not been produced. The
government has suggested this would support businesses in the
supply chain or larger firms, not those on the high street who
are eligible for the Local Restrictions Support Grant. https://www.gov.uk/guidance/check-if-youre-eligible-for-the-coronavirus-additional-restrictions-grant
Job Retention Bonus - Wave 17 of the Office for
National Statistics’ (ONS’) Business Impact of Coronavirus
(COVID-19) Survey (BICS) shows that nearly half of businesses in
the Accommodation and Food Services sector, and 20 per-cent of
the arts, entertainment and leisure sector were intending to
apply for the Job Retention Bonus. The hospitality industry
reported the highest reliance on the scheme. The bonus was a
one-off taxable bonus of £1000 to employers. Many companies have
raised concerns about the loss of this funding which they had
priced in.
The Federation of Small Business reported:
“Small businesses that have got lots of revenue issues were
looking forward to a bit of guaranteed income in January. That
one bit of light at the end of the tunnel has gone. If you had
not earned much for nine months, the prospect of £1,000 in your
account is huge.”
https://www.thetimes.co.uk/edition/business/bosses-cry-foul-at-rishi-sunaks-vanishing-1-000-a-worker-retention-bonus-d3sj8v2mf
https://www.gov.uk/guidance/check-if-you-can-claim-the-job-retention-bonus-from-15-february-2021
|
Question: Are you using, or intending to use,
either of the following schemes?
|
|
Percentage of businesses who have not permanently
stopped trading, broken down by industry, weighted by
count, UK, 19 October to 1 November 2020
|
|
|
|
Industry
|
Job Retention Bonus
|
|
Accommodation And Food Service Activities
|
46.7%
|
|
Arts, Entertainment And Recreation
|
21.9%
|
|
All Industries
|
29.3%
|
Sunak’s sleight of hand
