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Boroughs call for urgent financial support package for London businesses hit by Tier 4

© Stephanie Martin

Businesses across London are under huge financial stress. The move to Tier 4 over the weekend has left thousands of businesses uncertain whether their livelihoods will last much longer. London Councils, which represents all 32 London boroughs and the City of London Corporation, is asking government to urgently put forward an emergency support package for businesses including an immediate increase in grants to business and a targeted extension to the business rates holiday into next year.

This is critical now that London has moved into Tier 4. Already, London’s small businesses are struggling, with 34.1% reporting they have zero or less than three months of cash reserves left.

Moving London into Tier 4 during what is the busiest time of the year for the hospitality and retail industries is causing irreversible damage and risks the closure of many beloved businesses that simply cannot survive without intervention.

London’s businesses desperately need reassurance and certainty about their future, so London Councils is calling on government to take action and provide more funding for businesses who need help to keep going. The umbrella group for London local government would also like a clearer plan for businesses that looks ahead to when we emerge from the pandemic.

Some of these asks include:

– An urgent increase to the Local Restrictions Support Grant to businesses, which is totally insufficient given how long the crisis has lasted. We need greater support for those businesses who have been forced to close and we also need continued local discretionary grants to support those in supply chains to these businesses who have also been hit hard. We suggest that additional support be financed from the over £1.8 billion of business rate support returned by retailers and distribution to boroughs should be according to the number of businesses in their area.

– A targeted extension to the business rates holiday, allowing businesses to start financial plans for next year without the threat of a big tax bill they cannot afford.

– A reverse in the policy to end VAT-free shopping at the end of the year. This would mean that when international tourism returns to the UK, London’s retail industry would benefit hugely from international shoppers, who with the current policy would most likely choose to go elsewhere.

Cllr Georgia Gould, Chair of London Councils, said:

“Boroughs have worked tirelessly this year to support London’s businesses. We have delivered funding to local businesses, allocating £1.6 billion via over 108,000 individual grants to date. But unfortunately the huge need is overwhelming councils’ funding. We urgently need greater support from government to be able to do the work needed to help London’s cherished businesses, cultural venues and high streets survive this crisis.

“Businesses need our help now. The move to Tier 4 during such a busy time of year for the retail and hospitality industry will cause lasting damage that businesses already under strain will not survive.

“London is losing out on an estimated £10.19 billion in tourism spending in 2020. It would be unwise to jeopardise further losses by pushing international shoppers to other countries by ending VAT-free shopping.

“Our local businesses are desperate for a lifeline. They need to be able to survive this latest lockdown, financially plan their next year, with as much support as possible. We cannot let them face the uncertainties of 2021 without more support. If government abandons them now, we all risk losing the diverse, characterful and thriving businesses that makes London so unique.”