Labour has warned of a “triple-whammy cash crisis” in the run-up to Christmas as analysis has found that non-food retail, hospitality, leisure and cultural businesses have seen a £61bn hit to their takings compared to 2019.
Lucy Powell MP has highlighted that businesses over the festive period face “tumbling turnover, plummeting profits and crumbling confidence” – caused by government failure to effectively manage the pandemic.
She said: “The coronavirus crunch has wiped billions of pounds off company balance sheets and with the Chancellor’s sleight of hand on business grants, many firms are now facing a cash crisis that has his name all over it.
“The run-up to Christmas is an absolutely critical time of year for so many businesses on our high streets facing a triple whammy of tumbling turnover, plummeting profits and crumbling confidence as a result of the government’s failure to tackle the coronavirus.”
With House of Commons Library data showing that UK businesses in sectors such as hospitality and leisure have seen turnover fall by up to half compared to 2019, Labour has warned that billions of pounds in turnover are at stake this Christmas.
The shadow minister for business and consumers added: “Many companies are hanging on by their fingertips, if they are left to go bust by the government, we’ll see a bleak mid-winter for many, and an avalanche of job losses.”
Struggling fashion chains Peacocks and Jaeger, with 423 and 76 stores and concessions respectively, have gone into administration after a two-week deadline to find a buyer ended without a deal, putting 4,700 jobs at risk.
Non-food retailers normally take around a fifth of their turnover – £39bn – in the period leading up to Christmas, twice as much as what the firms usually expect to take during the much slower months of January and February.
Businesses in accommodation and food services, and those in the arts, entertainment and leisure sector, have recorded significant falls in their turnover of 79% and 71% respectively when compared to the usual figure for October.
Seven in ten food and accommodation services firms have also reported that their profits were down by more than 20% over the same period, with nearly four in ten down by more than 50%.
The research showed that four in ten in the sector, which is heavily reliant on the Christmas period for its viability, have reported that they have no cash reserves or that they will last less than three months.
Labour has also emphasised that while Rishi Sunak declared he was introducing bigger business grants upon the announcement of a second national second lockdown, of up to £3,000 per month, most firms will receive much less.
The local restrictions support grant launched by the Chancellor for the second lockdown provide the smallest rateable value businesses eligible for the relief with just half of the weekly cash amount they received in March.
Businesses in the next largest group, those with a rateable value between £15,000 and £51,000, are eligible to receive less than a third of the weekly amount they were granted during the first lockdown earlier in the year.
Anneliese Dodds has criticised the government for “always running to keep up” after the Chancellor used his third economic update within a month to unveil more financial support for businesses in the second coronavirus wave.
The Shadow Chancellor slammed the government for making a “last-minute” U-turn when he extended the furlough scheme, just hours before it was due to end, after months of rejecting Labour calls to renew the support.