Standoff over support for shuttered businesses

Chancellor Rishi Sunak has rejected calls to extend financial support for businesses affected by the delay in ending lockdown – despite warnings that many pubs, restaurants and nightclubs could be forced out of business.

The furlough scheme, which pays 80 per cent of people’s wages, is due to start being wound down at the end of this month as part of a “tapered” withdrawal of the scheme. From July 1 the government’s share will fall to 70 per cent with employers contributing 10 per cent.

Sunak is also resisting calls to extend the business rates holiday for retail, hospitality and leisure. The relief is due to fall from 100 per cent to 66 per cent on 1 July, although it will remain in place until March of next year.

Protections from landlords demanding owed rent from business tenants and potentially evicting them if they cannot settle their debts also look set to expire next month as planned.

A spokesperson for the Treasury said: “The furlough scheme is in place until the end of September – we deliberately went long with our support to provide certainty to people and businesses over the summer.

The spokesperson pointed out that businesses can continue to access other support including business rates cuts.

They claimed: “The number of people on the furlough scheme has already fallen to the lowest level this year, with more than 1 million coming off the scheme in March and April – showing our plan for jobs is working.”

But the decision to offer no new support has been met with horror by the leisure and hospitality industries –  with many nightclub owners, pub landlords and wedding planners telling the BBC last night that they will no longer be able to pay their bills.  

Kate Nicholls, chief executive of trade body UK Hospitality, warned the combination of rent payments and the reintroduction of business rates – albeit at a reduced rate – could be a “final nail in the coffin” for some firms.

The hospitality industry has previously warned that a four-week delay to the easing of restrictions – including an end to limits on how many people can meet indoors – could cost struggling businesses £3bn and put 200,000 jobs at risk.

The Night Time Industries Association, which represents clubs and bars across the country, said one in four businesses will not survive longer than a month without additional financial support. 

Ed Miliband, the shadow business secretary, said many businesses are worried about economic support being removed while they are still unable to trade or profit.

He said: “Nightclubs and live music venues, many restaurants and bars, the events, arts and wedding industries are still seriously affected by restrictions but they have repeatedly been left in the dark about economic support. It must remain in step with public health restrictions.”

“It would be wrong for businesses to suffer because of the Government’s poor handling of our borders and failure to contain the new variant.”