Retailers and landlords warn of business collapse without rent support

• Businesses fear they will no longer be able to employ the staff they have furloughed without government help

• The letter says existing government bailout loan schemes are not an option because they will leave businesses with unsustainable debts

Retailers and landlords have warned businesses are at risk of “imminent collapse” without extra support from the government on rents.

In a letter to small business minister Paul Scully and Chancellor Rishi Sunak, the British Retail Consortium and British Property Federation have renewed their appeal for the government to pay some of the rent due in lockdown.

The letter says government help is needed “urgently ahead of the June quarter day” or businesses will no longer be able to employ the staff they have furloughed. It is signed by BRC CEO Helen Dickinson, BPF CEO Melanie Leech and Vivienne King, CEO of Revo, representing shopping centre landlords.

The three groups called last month for a ‘furloughed space grant scheme’, whereby the government makes a contribution to rent in proportion to a retailer’s drop in turnover.

The Department for Business, Energy & Industrial Strategy is said to have sent a “long response” on 24 April, indicating the proposals were being reviewed ahead of a meeting with the groups the same week. However, the government has yet to announce any new support package resembling the recommendations.

The groups’ new letter says existing government bailout loan schemes are not an option because they will leave businesses with unsustainable debts.

“There is a crisis facing parts of the retail sector which we believe must be addressed urgently ahead of the June quarter day,” the letter says.

“Many businesses operate on small margins and have had little or no income coming in for several weeks and are at imminent risk. Even once the lockdown starts to be lifted they will take a considerable time to recover, with continued public health measures both impacting on their revenue and meaning increased operational costs. Moreover, for many of both the retail tenants and their landlords utilising increased existing debt facilities or accessing the government’s debt-based schemes (welcome though these are) is proving not be an option because of the fragility of the retail market and/or because the burden of additional debt will not be sustainable if they are to survive.

Read more: By tying landlords’ hands, the government has stored up a crisis for retail

“Without further action on property costs, many furloughed staff will find themselves in the position where their income is protected by the government but the company that employs them is unable to continue to do so since it can’t meet the costs of trading. Salary support, grants and other public expenditure made in the context of supporting businesses through the current pandemic will have been of no long-term benefit to the economy if those businesses have become insolvent.

“Feedback from our members suggest that, while welcome, the current offer of reliefs, grants and loans will not be sufficient to stave off the imminent collapse of many businesses, with the associated job losses, community impact and economic harm that comes with that. An intuitive stimulus could prevent that.”

The letter also appeals for the ministers to suggest an alternative to the proposed furloughed space grant scheme, calling for another meeting.

“We know that the FSGS is not the only option under consideration by officials and ministers,” it says. “We remain open to a discussion over alternative proposals that accord with the principles that we set out in our letter of 17 April, and which ultimately secure the objective of not requiring an otherwise sustainable company to go into liquidation due to forces far outside its control.

“We believe that the only way that this issue will be resolved will be through an approach where tenants, landlords, lenders and government work collectively and the cost burdens are shared by all parties as FSGS achieves, in order to minimise economic harm and widespread job losses. We stand ready to engage in such an approach and we therefore call for an urgent meeting with you and officials in BEIS, MHCLG and the Treasury to agree how best to secure this.”