Local job support scheme ‘not enough’ to save shattered industries

Businesses say the Chancellor’s latest package is ‘too little, too late’

Hundreds of thousands of jobs are still at risk as Rishi Sunak’s new grants to businesses closed by local lockdowns and their staff are “not enough”, employers have warned.

The extra furlough scheme and handouts to companies are too little for those ordered to shut their doors, and do nothing for those whose incomes have been flattened by the curfew and other restrictions, firms said.

“It is right that the Chancellor has responded to our long-standing calls for more local support, as so many areas across the UK now face restrictions and closures. More generous cash grants will be of some help, but for most this will not be enough to offset a sustained cash crunch,” said Adam Marshall at the British Chambers of Commerce. 

“As welcome as this new support will be for companies shut down by government decree, additional local restrictions and lockdowns will have a material impact on many other firms, especially in supply chains and in town and city centres. Their cash flow concerns, and worries about future demand, must be heeded.”

The hospitality industry in particular is still struggling, with tighter restrictions on customer numbers, visitor hours and, in Scotland, a ban on serving alcohol indoors.

The new measures only apply to businesses ordered to close completely, rather than partially, and so fail to help the sector outside a full lockdown.

Michael Kill, chief executive of the Night Time Industries Association, said the new measures are “too little, too late”.

“There have been segments of our industry that have been locked down for nearly eight months and haven’t had the Chancellor’s focus to support them, apart from the furlough scheme,” he said.

“We have already seen the best part of a good few hundred thousand jobs go purely for the fact that there has been no action. We are now at a point at the end of October that this is going to culminate in potentially half a million jobs going. It feels a bit too little, too late.”

Kate Nicholls, chief executive of UKHospitality, said: "If the government is really serious about avoiding mass redundancies in hospitality, then it needs to do something about the curfew in other parts of the country where infection is lower."

It came as nightclub operator G-A-Y fired the starting gun on legal action against the Government over the restrictions.

Jeremy Joseph, owner of the nightclub group, threatened this week that he would pursue a judicial review of the curfew if the restriction is not dropped, arguing that it makes “absolutely no sense” and does “the opposite of protecting people”.

In a letter to the health secretary, Mr Joseph said he had requested a “satisfactory response” by 4pm on Tuesday.

However, the Government has asked for 14 days to respond, prompting Mr Joseph to launch a judicial review.

“It is disappointing that the Government has failed to provide this evidence to date,” he said. “They fail to see the logic behind the arbitrary decision for all venues to close at 10pm.”

The impact of the pandemic on the hospitality sector was laid bare by new data showing the UK has nearly 25,000 fewer licensed premises open since before the coronavirus lockdown.

Findings published by CGA and Alix Partners showed just over 90,000 sites across the UK had reopened by the end of September, compared with 115,000 in March. 

Dame Carolyn Fairbairn, director general of the Confederation of British Industry, said a more consistent, evidence-based policy would help.

“We’re very mindful that the rising infection rate risks a new national lockdown, that additional measures are necessary to avert that,” she said.

“That said, we do want to see evidence published around restrictions. We understand the pace the Government is working at but if we take something like the 10pm curfew, that’s been challenging. There’s been relatively little transparency about that decision.”

Roger Barker at the Institute of Directors welcomed the measures, but said much more was needed to protect jobs and to create new ones.

“With the resurgence of the virus hitting more and more parts of the country, the Government’s decision not to renew a key insolvency measure simply must be revisited. Reinstating wrongful trading liability adds to the pressure on directors to pull the plug on their companies, when long-term viability is still far from clear. It makes little sense to have supported these businesses through the summer, only to let them collapse in the winter,” he said.

Mr Barker urged ministers to "get on the front foot where possible" by cutting employer national insurance costs and offering tax reliefs to encourage new jobs. 

The extension will ramp up pressure on potential fraudsters, as companies claiming furlough money will now have their names made public.

It means staff who are not in receipt of furlough money can check if their employer is fraudulently claiming, and report them.

“It shows the positive impact that the Government has recognised the challenges it faced, and has designed in checks and balances to deter the activity they don't want to happen, and to follow up if it does happen,” said Chris Sanger at EY.