According to an analysis by the Labour party, industries most affected by the UK's delayed reopening will need to find almost £50mn to cover wages once the government's furlough scheme is cut back on July 1. Hospitality, culture and arts businesses will need to cover the higher cost of keeping workers on the scheme even though they are forced by government regulations to limit the number of customers they serve over the next month or are forced to remain shut.
Labour said the figures, which are based on official data, showed that the chancellor Rishi Sunak should delay the tapering of the furlough scheme until the government could safely lift restrictions on gatherings and social distancing. Event organisers and nightclub owners have complained that they could be forced out of business by the cuts in subsidy, despite making huge efforts over the past 16 months to save money.
The Night Time Industries Association (NTIA) backed a letter, earlier this month, written by Manchester’s night-time economy adviser Sacha Lord to Prime Minister Boris Johnson, that said the four-week extension of the Covid-19 “roadmap” should be matched by an extension of government support. Lord said the hospitality sector expected to lose £3bn in total over the course of the four-week delay, following an £87bn loss over the past year. According to the NTIA, 54 per cent of businesses had ordered extra stock, 73 per cent had called in staff, many of them from the furlough scheme, and 60 per cent had sold tickets for events.
Shadow business secretary Ed Miliband said, “A month’s delay may seem like a short time, but for businesses legally closed from trading or those hanging on by their fingertips from going under and relying on the summer season, the delay is another blow. That businesses unable to reopen are being sent huge bills defies logic. Unless ministers take action, we risk pushing more firms over the edge.”
He added businesses had “done right by our country” during this crisis, but ministers had “repeatedly failed to grasp the simple principle that public health restrictions must be matched by fair economic measures.” The level of subsidy offered by the government to retain workers on employer payrolls will fall from 90 per cent to 80 per cent on July 1. However, to qualify for the scheme, employers must maintain pay at 90 per cent of a worker's salary up to a cap of £2,500 a month.
Labour said the hospitality industry had 14 per cent of its workforce on furlough, accounting for 269,477 people, while the arts, entertainment and recreation sectors had 21 per cent of workers on furlough, or 115,734 people. The party said, “That means businesses will have to contribute 34% towards their monthly business rates irrespective of their trading status. The average night club will have to pay £718 in July, the average bar will have to pay £500, the average restaurant will have to pay £598, and the average theatre will have to pay £1,048.”
