Labour condemns ‘smash and grab raid’ on struggling businesses

Thursday, 8 October 2020 22:30

Labour condemns ‘smash and grab raid’ on struggling businesses: Over £1 billion being clawed back by Government - including £340 million in areas with local restrictions - despite businesses facing a fight for survival Local authorities must hand back £1.3 billion of unspent emergency grants to the Government despite public health restrictions being reimposed This includes £340 million being clawed back from areas subject to local restrictions where businesses...Request free trial

Local authorities must hand back £1.3 billion of unspent emergency grants to the Government despite public health restrictions being reimposed
This includes £340 million being clawed back from areas subject to local restrictions where businesses have been hit hardest
Labour issues fresh call for government to redeploy the remaining grants funding as a Hospitality and High Street Fightback Fund to help save jobs and businesses

The Labour Party has today condemned a ‘smash and grab raid’ on struggling businesses, and demanded Business Secretary Alok Sharma stand up for businesses, as analysis reveals that over £1 billion of funding allocated to support businesses through the pandemic – including £340 million in areas facing local restrictions - is being clawed back by the government despite restrictions being reimposed.

At the start of the first national lockdown, Ministers made funding available for local authorities to support small businesses and those in the hospitality, leisure and retail industries, to help them stay afloat as they closed to help tackle the virus.

This fund operated on a ‘use it or lose it’ basis, with the provision that it would need to be spent by 30 August or handed back. But despite many areas now facing local restrictions, and warnings that half a million jobs could be lost in the hospitality industry alone before Christmas, Ministers are still forcing councils to return any cash they haven't yet used.

Labour argues that businesses across the country are currently in a fight for survival and should still be able to access these funds:

Businesses face the furlough cliff edge which will further squeeze already tight cash-flow and encourage redundancies. Nearly a third of workers in the accommodation and food services industries remain on furlough. This rises to 4 in 10 employees in the arts, entertainment and recreation sectors;
Businesses in areas subject to local restrictions face reduced demand as social gatherings are either discouraged or not allowed. The government’s offer of economic support to these areas has been slow and inconsistent, and the grant scheme it has belatedly set up would not cover a small business’s costs of employing one worker on minimum wage for the duration of the restrictions. No area qualifies for this grant because of the current restrictions in place.

Businesses that make up the night-time economy have been hit hard. A recent survey by the Night-Time Industries Association found that almost half (45 per-cent) of businesses would be making 60 per-cent of staff redundant, as a result of current restrictions, and being labelled ‘unviable’ in the Winter Economic Plan;

Labour is today issuing a fresh call for government to redeploy the remaining business grants funding as a Hospitality and High Streets Fightback Fund, to save jobs and businesses now, and help them survive through the bleak winter period.

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

“Businesses are in a fight for survival. The Business Secretary must stand up to the Treasury and demand they reverse this smash and grab raid on business support or risk the decimation of our high streets. It makes zero sense to remove economic support while public health restrictions are tightening.

"It’s now clear that some places and some businesses are going to be acutely hard hit over a longer period than was first thought. Rather than clawing remaining funds back, the government should redeploy these funds and allow local areas to use them flexibly to support those businesses and town centres hardest hit, before we see waves of redundancies, shuttered high streets and viable businesses going bust.”

Ends

Notes to Editors

Labour’s Hospitality and High Street Fightback Fund

Government grants data [link in table below] shows the number of business premises helped nationally, and in each council area, through the small business grant fund and the retail, hospitality and leisure grants fund. From this we can work out the underspend locally in each council area, regionally and nationally, as well as the average amount a business received. Of the initial £12.3 billion allocation, £11 billion has been distributed, leaving an underspend of £1.3 billion.

The government closed the scheme on 30 August to new applicants, and local areas have been told to return unused funds to government. Labour is also calling for the scheme to be re-opened.

Local authorities were restricted on the type of businesses they can help in their area. Labour is arguing that, in addition to the scheme being reopened, these restrictions should be lifted, so local councils can better target support at struggling firms and their supply chains.

Area	Initial allocation	No. of grant payments made as at 1^st Sept	Value of Payments	Average grant payment	Underspend
England	£12,333,504,000	897,590	£11,010,200,000	£12,266	£1,323,304,000
Lockdown areas	£2,819,802,000	212,970	£2,480,160,000	£11,646	£339,642,000

There is currently a £340 million underspend in the grants scheme in areas with local restrictions.

Local Authority	Region	Initial Allocation	Number of grant payments made to hereditaments as at 01 Sep	Value of payments (£)	Average grant payment	Underspend
Leicester City Council	East Midlands	£85,352,000	6,343	£73,015,000	£11,511	£12,337,000
Oadby and Wigston Borough Council	East Midlands	£10,212,000	736	£8,560,000	£11,630	£1,652,000
Durham County Council	North East	£107,296,000	8,912	£99,785,000	£11,197	£7,511,000
Gateshead Council	North East	£38,440,000	3,226	£37,915,000	£11,753	£525,000
Hartlepool Borough Council	North East	£20,916,000	1,571	£17,900,000	£11,394	£3,016,000
Middlesbrough Council	North East	£25,926,000	2,004	£23,505,000	£11,729	£2,421,000
Newcastle City Council	North East	£63,782,000	4,711	£58,555,000	£12,429	£5,227,000
North Tyneside Council	North East	£38,490,000	2,816	£32,435,000	£11,518	£6,055,000
Northumberland County Council	North East	£97,716,000	7,871	£88,895,000	£11,294	£8,821,000
South Tyneside Council	North East	£28,196,000	2,172	£24,870,000	£11,450	£3,326,000
Sunderland City Council	North East	£52,858,000	3,945	£44,865,000	£11,373	£7,993,000
Blackburn with Darwen Borough Council	North West	£46,448,000	3,694	£40,585,000	£10,987	£5,863,000
Blackpool Council	North West	£59,124,000	3,934	£44,695,000	£11,361	£14,429,000
Bolton Metropolitan Borough Council	North West	£68,092,000	5,102	£57,980,000	£11,364	£10,112,000
Burnley Borough Council	North West	£26,510,000	1,988	£22,460,000	£11,298	£4,050,000
Bury Council	North West	£42,920,000	3,374	£39,170,000	£11,609	£3,750,000
Chorley Borough Council	North West	£24,784,000	1,907	£21,800,000	£11,432	£2,984,000
Fylde Council	North West	£21,662,000	1,552	£18,100,000	£11,662	£3,562,000
Halton Borough Council	North West	£20,134,000	1,485	£17,280,000	£11,636	£2,854,000
Hyndburn Borough Council	North West	£24,558,000	1,972	£20,440,000	£10,365	£4,118,000
Knowsley Council	North West	£19,636,000	1,410	£16,485,000	£11,691	£3,151,000
Lancaster City Council	North West	£37,616,000	2,646	£30,405,000	£11,491	£7,211,000
Liverpool City Council	North West	£107,810,000	8,247	£100,665,000	£12,206	£7,145,000
Manchester City Council	North West	£121,032,000	8,152	£101,875,000	£12,497	£19,157,000
Oldham Metropolitan Borough Council	North West	£54,738,000	4,227	£48,450,000	£11,462	£6,288,000
Pendle Borough Council	North West	£26,432,000	2,016	£21,840,000	£10,833	£4,592,000
Preston City Council	North West	£34,970,000	2,649	£31,440,000	£11,869	£3,530,000
Ribble Valley Borough Council*	North West	£18,926,000	1,547	£17,345,000	£11,212	£1,581,000
Rochdale Metropolitan Borough Council	North West	£46,660,000	3,859	£42,865,000	£11,108	£3,795,000
Rossendale Borough Council*	North West	£19,080,000	1,469	£15,770,000	£10,735	£3,310,000
Salford City Council	North West	£47,408,000	3,639	£42,735,000	£11,744	£4,673,000
Sefton Council	North West	£61,942,000	4,196	£49,865,000	£11,884	£12,077,000
South Ribble Borough Council	North West	£20,888,000	1,676	£19,280,000	£11,504	£1,608,000
St Helens Metropolitan Borough Council	North West	£31,668,000	2,286	£26,550,000	£11,614	£5,118,000
Stockport Metropolitan Borough Council	North West	£66,574,000	5,376	£61,785,000	£11,493	£4,789,000
Tameside Metropolitan Borough Council	North West	£53,810,000	4,148	£45,635,000	£11,002	£8,175,000
Trafford Council	North West	£47,538,000	3,537	£43,395,000	£12,269	£4,143,000
Warrington Borough Council	North West	£36,552,000	2,911	£36,925,000	£12,685	-£373,000
West Lancashire Borough Council	North West	£22,450,000	1,741	£20,605,000	£11,835	£1,845,000
Wigan Metropolitan Borough Council	North West	£80,860,000	5,338	£62,335,000	£11,678	£18,525,000
Wirral Council	North West	£63,562,000	4,333	£49,645,000	£11,457	£13,917,000
Wyre Council	North West	£31,970,000	2,341	£27,160,000	£11,602	£4,810,000
Birmingham City Council	West Midlands	£231,576,000	17,817	£214,020,000	£12,012	£17,556,000
Wolverhampton Council	West Midlands	£53,518,000	3,954	£44,895,000	£11,354	£8,623,000
Sandwell Metropolitan Borough Council	West Midlands	£73,036,000	5,022	£56,820,000	£11,314	£16,216,000
Solihull Metropolitan Borough Council	West Midlands	£28,736,000	1,951	£26,380,000	£13,521	£2,356,000
Calderdale Council	Yorkshire and the Humber	£65,570,000	5,231	£58,565,000	£11,196	£7,005,000
City of Bradford Metropolitan District Council	Yorkshire and the Humber	£135,934,000	10,758	£122,175,000	£11,357	£13,759,000
Kirklees Council	Yorkshire and the Humber	£113,650,000	8,501	£95,540,000	£11,239	£18,110,000
Leeds City Council	Yorkshire and the Humber	£162,244,000	12,677	£155,900,000	£12,298	£6,344,000
TOTAL AREAS IN LOCAL LOCKDOWN RESTRICTIONS		£2,819,802,000	212,970	£2,480,160,000	£11,646	£339,642,000
*As at 30/08/2020
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/914040/200901-local-authority-grant-payments.csv/preview

Cash squeeze facing businesses

- The latest Business Impact of COVID-19 Survey (BICS) results estimate that 29 per-cent of workers in the accommodation and food services industries remain on furlough. This rises to 41 per-cent in the arts, entertainment and recreation sectors. https://www.ons.gov.uk/economy/economicoutputandproductivity/output/datasets/businessimpactofcovid19surveybicsresults

Hospitality jobs warning

- UKHospitality Chief Executive Kate Nicholls appeared before the Treasury Select Committee on 6^th September, warning that a survey of hospitality businesses predicated 560,000 extra redundancies by the end of 2020. https://parliamentlive.tv/Event/Index/530a86b6-e3a2-4c32-926a-b88833759608

- Businesses that make up the night time economy have been hit hard. A recent survey by the Night Time Industries Association found that almost half (45 per-cent) of businesses would be making 60 per-cent of staff redundant, as a result of current restrictions, and being labelled ‘unviable’ in the Winter Economic Plan. https://www.bighospitality.co.uk/Article/2020/10/06/Night-time-economy-pleads-for-further-support-after-curfew-prompts-mass-redundancies

Grants fund closure, and claw back

- Ministers confirmed in a Written Parliamentary Question to Lucy Powell MP that the grant scheme has closed, and funds are being returned.

Local authorities have now closed their Business Grant Funds and are in the process of making final payments to businesses. These must be complete by 30 September. The reconciliation process will then take place from October.

Answered 11 September 2020

https://questions-statements.parliament.uk/written-questions/detail/2020-09-08/86676