Sir Keir Starmer’s party intervened on Monday in the growing row over whether banks are doing enough to support firms desperately struggling to survive, having themselves been bailed out by the taxpayer during the financial crisis just over a decade ago.
Speaking to The Standard, Shadow Economic Secretary to the Treasury Pat McFadden said: “As we emerge from lockdown over the coming months it is important to help businesses get back on their feet.
“Banks should show understanding to good viable businesses that can be successful again when the conditions allow.”
He added: “Many businesses have taken on a heavy debt burden over the past year and have little room to spare when it comes to new investment.
“That’s why we recently called on the Government to change the terms of its Bounce Back Loans so businesses only have to start repayments when they are actually growing again, helping to lift the debt burden from their shoulders.”
The Standard revealed on Friday how some businesses in the hospitality sector have reportedly been put in a higher risk category by lenders.
Some firms have not been able to get any loans at all.
Many businesses are seeking to limp on until restrictions are eased later in the spring and summer and then try to rebuild as the economy comes back to life.
New figures compiled for the Standard by trade body UKHospitality underlined the huge financial shortfall faced by London hospitality businesses that will have to be bridged by support from banks and other financial backers.
Their estimates suggest that the delay in reopening the sector for indoor dining and drinking until May 17 will cost its £2.2 billion in lost revenues and put at risk a further 19,000 jobs.
The year long series of restrictions and forced closures have wreaked havoc with the credit status of hospitality businesses making it far harder for them to raise funding.
Adam Hyman, founder of the CODE Hospitality consultancy, said: “Banks are being very cautious on hospitality but it has spread wider than that. Even utility companies are now being very difficult and creating lots of hoops for restaurants to jump through.”
Liberal Democrat leader Sir Ed Davey, MP for Kingston and Surbiton, stressed: “If businesses are not given the lifeline of loans they will simply disappear, leading to hundreds of thousands of redundancies and untold misery for so many families.
“Many people will remember that in 2008 the country had to bail out the banks even though they had caused the problem. “Now the banks need to bail out small businesses which are facing oblivion through no fault of their own.”
Conservative MP Kevin Hollinrake, co-chair of the All-Party Parliamentary Group on Fair Business Banking, has called on banks to “step up” to support firms rather than “close the door to them”.
Steve Double MP, Tory chairman of the All-Party Parliamentary Group for Hospitality and Tourism, has urged lenders to “recognise the unique circumstances” and be “as flexible as they can” so businesses can re-open once restrictions are eased.
A UK Finance spokesperson said: “The UK’s banking and finance industry has provided unprecedented levels of support to help businesses through the pandemic, including thousands of firms in the hospitality sector.
“Around 118,000 accommodation and food services businesses have now received £5.5 billion worth of support through the government-backed loan schemes since they were put in place last year.
“UK Finance and its members will continue work with the government and other groups to ensure businesses are able to access the finance they need.”