Labour accuses government of “smash and grab raid” on struggling businesses

Labour has described the government’s decision to force local authorities to hand back £1.3bn in unspent emergency coronavirus business grants as a “smash and grab raid on business support”.

The party has today argued that “clawing back” the money, which includes £340m for areas still currently under local Covid restrictions, puts England at risk of “waves of redundancies” and “shuttered high streets”.

Labour is calling on the Conservatives to instead redeploy the unspent funding as part of a proposed hospitality and high street fightback fund to help save jobs and businesses in the hardest-hit sectors.

Shadow business minister Lucy Powell said: “Businesses are in a fight for survival. The Business Secretary must stand up to the Treasury and demand they reverse this smash and grab raid on business support or risk the decimation of our high streets.

“It makes zero sense to remove economic support while public health restrictions are tightening. It’s now clear that some places and some businesses are going to be acutely hard hit over a longer period than was first thought.

“Rather than clawing remaining funds back, the government should redeploy these funds and allow local areas to use them flexibly to support those businesses and town centres hardest hit before we see waves of redundancies, shuttered high streets and viable businesses going bust.”

The funding was initially provided by the government in March to help struggling businesses cope with the effects of coronavirus, but the money came with a ‘use-it-or-lose-it’ clause mandating that it be spent by August 30th.

Despite coronavirus restrictions meaning that hard-hit industries such as hospitality are at risk of hundreds of thousands of job losses and still in need of support, the government has continued to demand the return of any unused money.

Of the areas still under local lockdowns, Blackpool and Leicester are set to lose the most funding, with the city and town being forced to return £14.5m and £12m in grant funding to the government respectively.

Nearly 900,000 grants have been given to struggling businesses in England under the government support scheme, with the average payment amounting to just over £12,000 – but over a billion pounds of funding is yet to be spent.

Labour has argued that the remaining funding is a vital lifeline for countless businesses who are now facing even more hardship in the coming weeks with a looming cliff edge as the furlough scheme finishes at the end of this month.

This latest call from Labour comes amidst criticism from the party of Chancellor Rishi Sunak’s new job support scheme, which was unveiled as part of his winter economic plan to replace the furlough scheme.

Labour welcomed the “U-turn” on providing some form of wage support but highlighted that the programme, designed only to protect “viable jobs”, does not offer any specific help for hard-hit sectors such as hospitality.

Shadow Chancellor Anneliese Dodds wrote to her counterpart last week to point out seven ways in which the winter plan “fails Britain’s workers”. She accused Sunak of returning to Margaret Thatcher’s “sink or swim” jobs mentality.