Labour is urging the government to provide a second round of support for businesses amid signs lockdown pressures are leading to a surge in insolvencies and high-profile job losses.
The shadow business secretary, Ed Miliband, said ministers needed the government to follow up its emergency Covid-19 support package with changes to its business loan schemes and targeted help for sectors badly hit by the pandemic.
Miliband’s call came on a day that carmaker Aston Martin announced the loss of 500 jobs and car dealership Lookers announced 1,500 redundancies. Lookers has made extensive use of the government’s wage subsidies. The announcements followed Wednesday’s news of 3,000 job cuts at the Restaurant Group.
The government has extended its furlough scheme until the end of October, introduced state-backed loans, announced VAT and business rate holidays, and loosened the UK’s insolvency laws in what the chancellor, Rishi Sunak, has called the biggest package of support for the economy ever provided in peacetime.
Miliband said more was needed, including a speeding up of loans to business, more help for the hardest hit sectors and an economic recovery plan.
He said: “We now need a second phase of support, which further reforms the loans system and provides additional help for sectors like hospitality, tourism and the arts that will take longer to reopen and recover. We also need a plan for recovery which helps our economy out of recession as soon as possible.
“The fate of businesses up and down the country is in the government’s hands.”
Labour was broadly supportive of the measures taken by ministers in the early stages of the crisis but in the past few weeks has become more critical of the government’s response.
Miliband said Labour supported the insolvency bill but said the latest figures showed the government’s loans schemes were still not working nearly well enough for UK businesses.
The Treasury says the flow of lending to small businesses has improved since Sunak announced “bounce-back” loans last month, under which small businesses can borrow up to £50,000 interest-free for a year with a 100% state guarantee.
Miliband said bounce-back loans were also supposed to improve access to the government’s coronavirus business interruption loan scheme but the latest official figures showed the weekly approval rate falling.
More than 40,000 businesses were either still waiting or had been rejected for assistance through the coronavirus business interruption loan scheme (CBILS). More than two-thirds of applicants were still waiting to access the larger loans scheme, the coronavirus large business interruption loan scheme (CLBILS), he added.
Miliband said: “Urgent reform is needed to get banks lending to businesses, including the removal of technicalities in CLBILS which are standing in the way of large firms accessing finance.
“Every business that struggles to get a loan and that we risk going to the wall is not just devastating for that firm but damages workers and our economy. Labour supports the insolvency bill but it is only a small part of what is necessary to help businesses get through this crisis.”