Retailers losing £2bn a week in lockdown

Rishi Sunak has ramped up the furlough scheme, but businesses still have other costs that must be met despite not being able to trade

Businesses devastated by lockdown are losing billions of pounds a week and desperately need extra help to survive, bosses have warned ahead of Rishi Sunak’s spending review.

Retailers deemed to be "non-essential" are losing £2bn every seven days when they should be raking in pre-Christmas sales, according to Helen Dickinson of the British Retail Consortium.

At the same time, Kate Nicholls of UKHospitality said that pubs, restaurants and hotels expect to burn through £500m this month as they face ongoing expenses despite being unable to operate.

It comes as the Chancellor prepares to next week set out his spending priorities for 2021, amid huge uncertainty over the economy and fears of a brutal Christmas which could lay waste to thousands of struggling companies.

Ms Nicholls said that the hospitality industry had lost around 667,000 jobs even before England was plunged back into national lockdown to fight the spread of Covid.

Business leaders called on the Chancellor to look again at business rates relief, grants to shuttered companies and the now-postponed bonus for employers taking back furloughed staff.

Bosses also begged for support to help those self-employed who have not qualified for handouts on offer so far, and new help for landlords owed rent by businesses ordered to close.

Ms Nicholls said that grants of up to £3,000 on offer to shuttered firms will make almost no difference.

She also hit out at the decision to delay the coronavirus job retention scheme, which would have paid companies £1,000 in spring for every previously furloughed worker they kept in a job.

Rent arrears have been growing, but a moratorium on evictions for non-payment is due to expire at the end of next month. UKHospitality wants this extended for another six months.

Addressing MPs on the Business Select Committee, Ms Nicholls said: “It is unsustainable to think that small businesses which have had protracted periods of closure will be able to pay a full year’s rent in January, which is what some of them are facing.

“Unless we find a way of resetting commercial rents we are going to bake in a problem through the whole recovery and hamstring people who want to rebuild their business post-pandemic.”

A large share of the self-employed, such as those who are directors of their own companies, are also in desperate need of help but have often been excluded so far, Mike Cherry from the Federation of Small Businesses said. He added that startups were often established after the cut-off date for funds.

Mr Cherry said: “I would have hoped that for the second lockdown the commensurate support would have been looked at again to see how these groups of individuals and businesses could be better supported."

He said that supermarkets are among the companies which have benefited from business rates relief even though they have not suffered any loss in trade, while other firms have struggled yet had less help.

The Institute for Fiscal Studies expects more infrastructure spending to be announced by the Chancellor, potentially combined with restraint on public sector pay.

Meanwhile, Bank of England Governor Andrew Bailey emphasised the heightened levels of uncertainty facing businesses across the country due to Covid-19 and the end of the Brexit transition period. 

He stressed that the emergence of a vaccine was a “big step forward” in lowering uncertainty for businesses, and added that post-Covid structural changes were unlikely to be as painful as 1980s deindustrialisation.

Mr Bailey added: “The prevailing level of uncertainty means there is no cause to be complacent here – and you should expect a central bank to remain cautious.”

Rishi Sunak has been urged to support the economy with extra investment in next week’s review by former Chancellor Lord Darling.

He told the CityUK conference: “You need to concentrate on the stuff that's shovel-ready or as near as you can get to that. And you should also not be afraid to devolve spending decisions to the English regions, because sometimes they do know better than the man or woman in Whitehall."

In a separate speech, former Chancellor Alistair Darling said: “The pitfall I would caution against is don't do 'Austerity Two'.

"It not only flies in the face of everything the Government says he wants to be doing, but it would also be a very short-sighted policy as far as the UK is concerned. We're going to have to do a lot of rebuilding one way or another.”

Lord Darling warned there would “be a reckoning” on the billions in debt racked up in the fight against Covid-19, but added that Mr Sunak should support the economy “probably into 2022. To take off that support too soon could be catastrophic.”

Shadow chancellor Anneliese Dodds called on Mr Sunak to bring forward £30bn in capital spending, an “ambitious” plan to retrain workers and create a new National Investment Bank in line with other major economies.