A letter from Business Minister Nadhim Zahawi says there will be no special financial support from the Government for businesses in Leicester and the surrounding affected areas despite a localised lockdown that began on 30 June.
East Midlands Chamber has responded to the letter, saying that the lack of support is a “massive mistake.”
Scott Knowles, Chief Executive of East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire), said: “The decision by the Government not to provide any special support to Leicester businesses forced into a local lockdown that puts them out of step with the rest of the UK is a massive mistake.
“The costs associated with having recently reopened or having prepared to reopen, and then closing down again, are significant and underappreciated. A number of businesses have already lost money on perishable stock after getting ready to welcome back customers following an extremely challenging few months.
“Without further support, there will unfortunately be a greater number of business failures in organisations that, without the impact of the lockdown, would be fundamentally sound.
“Many businesses have picked themselves up again and again over recent months but given the severe cashflow restrictions many are facing, some will now question whether they are able – or indeed have the appetite – to do so again.
“We have lobbied Government to provide additional support in the form of grants, as opposed to debt that would just store up problems for 12 months’ time once interest rates pick up or deferred VAT needs to be paid. In order to support them in their planning and decision making, we have also asked for businesses to be given clarity over what a strategy for exit may look like and any tests that need meeting for the lockdown to end.
“The refusal from Westminster to provide any help means we now risk a two-tier recovery that risks disadvantaging Leicester, plus any other part of the country that may suffer a similar fate in the future, way beyond the actual period of the lockdown.”