Ending furlough scheme in autumn will close more pubs, Labour warns

09-Sep-2020 - Last updated on 09-Sep-2020 at 10:02 GMT

Pub closures: more than 5,500 pubs and bars have closed since the Conservative Party entered Government in 2010, on average one every 14 hours, according to Labour Party analysis

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Shadow business minister Lucy Powell has warned that a ‘blanket approach’ to ending the Government-backed Coronavirus Job Retention Scheme will see more pubs shuttered.

According to Labour Party analysis, more than 5,500 pubs and bars have closed since the Conservative Party entered Government in 2010 – on average one every 14 hours – with the number of venues falling in every region of the UK.

However, shadow business minister Lucy Powell estimates that these closures will accelerate in the coming months should Chancellor Rishi Sunak wrap the Government-backed furlough scheme at the end of October as planned.

As recently reported by The Morning Advertiser (MA), businesses including pubs and bars are currently required to pay 10% of furloughed workers’ wages, with taxpayers contributing 70%, after changes to the scheme were implemented on 1 September.

As part of a tapered withdrawal of the scheme, employers will have to pay 20% of wages with taxpayers covering 60% during October before the scheme ends at the end of the month.

According to CGA’s Business Confidence Survey more than four in every five (83%) hospitality operators furloughed at least 90% of their staff during lockdown, with 96% of sites using the Coronavirus Job Retention Scheme to furlough 70% of staff.

Blanket approach threatening

“Pubs are a vital part of our high streets and social fabric in communities up and down the country,” Powell explained.

“They have been hard hit by the pandemic, and Tory indifference and incompetence over the years means that many have gone to the wall.

“Ministers’ blanket approach to ending the furlough threatens the future of many more.

“The furlough scheme must be extended for hard hit sectors to save jobs now, and a hospitality and high street fund so local areas can target support at businesses still in distress.”

According to a recent Hospitality Leaders poll by Lumina Intelligence, a division of The MA’s parent company William Reed Business Media, one-in-ten (11%) operators said that the extension of the furlough scheme topped their political wish list.

However, the extension of tax relief beyond January 2021 pipped furlough extension and a further freeze on business rates (34%), with 37% of respondents ranking an extension to the VAT reduction scheme beyond 21 January as their top priory for Government support.

Reconsider ongoing support

Powell’s calls for extended furlough follow comments from Greater Manchester’s night-time economy adviser, Sacha Lord, on 3 September urging the Prime Minister to stop celebrating the return to work while almost 60% of night-time operators face closure without further backing.

According to the Night Time Industries Association, 57% of businesses in the sector will not survive longer than two months without further Government support while three quarters (73%) of night-time operators will be making more than half their workforce redundant from September.

"For some, August has been strong with the Eat Out to Help Out scheme, but my fear is for those in the wider night-time economy who haven't benefited,” Lord said. “Not only the wet-led bars and pubs who weren't included in the offer, but the nightclubs, live music venues and theatres which are still closed.

"Rent holidays have ended, grant schemes are closed, and next month, all furlough support for these businesses will finish, so today, I am pleading with Johnson, Sunak and the Government to reconsider ongoing support for this sector.”