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

Friday, 21 May 2021 00:01

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...Request free trial

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.”

Ends

Notes to Editors

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travel to work area 2011-based	March 2020 - Claimant count	April 2021 - Clamaint count	Change	% Employment in Tourism Industries
Aviemore and Grantown-on-Spey	110	375	240.91%	41.7
Pitlochry and Aberfeldy	105	340	223.81%	37.5
Whitby	310	650	109.68%	33.3
Minehead	340	755	122.06%	33.3
Pwllheli and Porthmadog	430	990	130.23%	33.3
Pembroke and Tenby	850	1,440	69.41%	32.1
Kingsbridge and Dartmouth	240	800	233.33%	31.8
Tywyn and Dolgellau	285	725	154.39%	31.2
Girvan	250	415	66.00%	31.2
Penzance	905	2,150	137.57%	30.0
Ullapool	90	275	205.56%	30.0
Broadford and Kyle of Lochalsh	105	275	161.90%	28.6
Golspie and Brora	160	285	78.13%	28.6
Mull and Islay	70	205	192.86%	28.6
Portree	70	235	235.71%	28.6
Oban	255	595	133.33%	28.1
Fort William	315	735	133.33%	27.3
Cromer and Sheringham	470	1,170	148.94%	26.7
Skegness and Louth	2,810	4,435	57.83%	25.0
Wadebridge	405	1,050	159.26%	25.0
Kendal	510	1,555	204.90%	24.4

These areas saw a 149.7% rise in people claiming out of work benefits between March 2020 and April 2021, compared to 108.7% in the UK as a whole. This means these areas saw rises 38% higher than the UK average (or 31.7 percentage points).
Claimant count data accessed via nomis, May 2021, https://www.nomisweb.co.uk/query/select/getdatasetbytheme.asp?theme=72

The definition of tourism industries is taken from SIC code definition used by ONS’s Tourism Intelligence Unit. Proportion of jobs in these industries taken from the Business Register and Employment Survey and uses the Travel to work area geography.
Business Register and Employment Survey, accessed via nomis May 2021, https://www.nomisweb.co.uk/query/select/getdatasetbytheme.asp?theme=72
Labour has laid out plans for businesses to have more flexible options to repay debt taken on to stay afloat during the Covid crisis, including through a fair repayment scheme based on the amount they’re making - that will see businesses only begin to repay once they are out of the red and back on their feet. https://labour.org.uk/press/labour-sets-out-covid-debt-plan-to-turbocharge-british-business-recovery/
Latest figures for Coronavirus Business Interruption Loans (CBILs) and Bounce Back Loans (BBLs) show that businesses are still £62,163,233,196 in debt.
Source: British Business Bank

14%of accommodation and food service businesses surveyed have low or no confidence they will survive the next three months.

19.7% of accommodation and food service businesses surveyed said they are at moderate risk of insolvency.
Source: Business Impact of Covid Survey
Without further Government action, the Office for Budget Responsibility (OBR) currently estimates that £27.2 billion of debt taken on during the crisis will never be repaid, meaning a huge cost to the taxpayer as well as the loss of jobs and livelihoods. https://obr.uk/efo/economic-and-fiscal-outlook-march-2021/ (Paragraph 3.91)