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Cost to businesses of last minute turnaround on reopening


Businesses told to remain shut by government with less than 24 hours’ notice spent millions on failed reopening

Many businesses were faced with a fresh blow after being given just one day’s notice by government to scrap their plans to reopen, costing them millions in vital cash, Labour’s Shadow Business and Consumer Minister Lucy Powell set out today.

Bowling alleys, casinos and beauty salons across the country had all spent time and money preparing to reopen or extend services, taking staff off furlough and taking bookings. Yet they are now facing an even deeper financial hole thanks to the change at such short notice.

Meanwhile the wedding industry, comprised of around 500,000 people and 139,000 mainly small businesses including caterers, cake-makers, planners, photographers, make-up artists, musicians and florists, was also hit by the last-minute changes, facing scores of cancelled and postponed events following the government’s decision on Friday to scrap wedding receptions of up to 30 people, with immediate effect.

Labour can reveal the impact of the last-minute changes:

  • The casino industry estimates the cost of taking staff off furlough, training, security, food and beverage, in preparation to reopen on 1 August, was £6 million. This is on top of the £5 million it costs casinos each week that they remain in a holding pattern waiting to reopen.
  • Ten-pin bowling centres estimate that preparing to reopen cost at least £65 million, in staffing costs and marketing, with the next two weeks of closure likely to cost at least £8.65 million.
  • The wedding industry has taken an estimated £6.5 billion hit from Coronavirus through cancellations and postponements of weddings throughout the crisis, and the last-minute postponement of weddings of up to 30 people being allowed means they have now missed 2020’s peak wedding season.
  • Beauty salons across the country have had to cancel bookings and now have no date for restarting any facial beauty treatments. 94% of people working in the beauty industry are female, and 60% are aged 16-34, with women and young people being disproportionately economically impacted by the crisis.

These businesses, which are bringing in little or no income, are now being forced to contribute to the furlough scheme if they want to protect their employees’ jobs. This will cost, on average, £550 per employee over three months. Without targeted sectoral support, tens of thousands of jobs could be at risk.

Lucy Powell MP, Shadow Minister for Business and Consumers, said:

“The unpredictable nature of this virus means that public health measures must be flexible and responsive, but it surely follows that economic measures must be the same.

“It’s clearly illogical and unfair to prevent businesses from opening their doors, cutting them off from any income, and to cut their furlough lifeline at the same time.

“Labour is asking the government to take stock of what’s going on around them and to urgently rethink their rigid approach.

“They’ve said they can’t save every job, but we’re seeing a jobs bonfire. They need to target their support at the hardest-hit sectors or be responsible for another wave of mass redundancies.”

Many other businesses still remain in the dark with no reopening date, yet are now contributing – on average – £550 per furloughed employee over the next three months. These include exhibition halls, conference centres, indoor skating rinks, soft-play areas and night clubs.

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