The retail sector is set to be hit by the tapering off of government support measures, with businesses now set to contribute 10% towards the cost of furlough following measures that came into effect yesterday (1 July).
The move will affect an estimated 450,000 businesses, including many retailers, according to new statistics released by the Labour Party.
Around 375,000 businesses were also estimated to have been hit by the cut to business rates relief for retail, hospitality and leisure, which came into effect on the same date.
It comes as local authorities have estimated that 374,172 will be claiming the relief this month as businesses continue to recover from Covid. Affected businesses are reportedly set to lose business rates relief at an average of around £1,200 per business.
According to Labour’s research, approximately 60% of affected businesses are shops, 30% are hospitality and leisure properties, and 10% are other types including accommodation.
It added that this suggests around 225,000 shops, 112,000 hospitality and leisure businesses and 37,000 other businesses will be affected.
In total, 450,000 businesses will have to pay £225m more as a result of the reduction in furlough generosity.
In light of this, Labour is calling on the government to delay the increased employer contribution to furlough, adding that many of those still on furlough are those in the most affected sectors, such as hospitality, live events, accommodation and tourism.
In addition, it said the government can “learn lessons” from Wales, which has given the “vast majority” of businesses 100% business rate relief for the course of this financial year.
Shadow chief secretary to the Treasury, Bridget Phillipson MP said: “The government’s reckless and negligent approach to border controls is being paid for by British businesses now. A month’s delay may seem like a short time, but for businesses in retail, hospitality and leisure, legally closed from trading or relying on the summer season the delay is another blow.
“We want to see businesses make it through and thrive because they are an important part of what makes our country great, and essential for driving our recovery. The government must make sure economic measures go hand in hand with public health measures and that our British businesses and high streets are not left out in the cold.”