The Labour Party has accused the government of “economic negligence” as it has estimated 650,000 hospitality businesses could collapse in the next three months amid reports of the current lockdown lasting until May.
New analysis by the opposition party, based on the latest ONS data, has revealed an “underlying cash crisis” for firms on the high street.
It found more than a million food service and accommodation businesses said they have less than three months of cash reserves and 650,000 adding they have little confidence in avoiding collapse.
The Labour Party is calling on business secretary Kwasi Kwarteng to “be the voice of business, not a mouthpiece for the Treasury” and back businesses in England by urgently outlining how he will support struggling hospitality and leisure businesses to survive the crisis.
Government advisers have recently suggested that businesses including hotels, pubs, hairdressers and beauty salons may remain closed for another three months to help tackle the spread of the virus, but there has reportedly been “no update” from ministers on the economic support available since 5 January.
According to the party, under the current economic offer, the average hospitality or leisure business would receive £11,000 less during the third lockdown than it did during the first – despite being in a “significantly worse” financial position now.
Lucy Powell MP, shadow minister for business and consumers, Labour, said: “The business secretary needs to stand up for businesses in government not stand back and leave them to go bust. It’s his job to be their strong voice, not a Treasury mouthpiece.
“A million firms are struggling with a cash crisis threatening jobs and livelihoods just as the vaccine offers hope. The cost of business insolvencies and unemployment on this scale would take a wrecking-ball to our economy.”
She added: “If the government fails to act on this latest evidence, and doesn’t bring forward an urgent, comprehensive plan, they’ll be guilty of economic negligence that will choke off the recovery, and damage our country for years to come.”