The Business, Energy and Industrial Strategy (BEIS) committee has called for the government to address growing commercial rent arrears in a report that says the issue is "jeopardising" many businesses' prospects of long-term recovery.
The interim pre-Budget report on the impact of coronavirus on business and workers said the rent moratorium, due to expire at the end of March, "does little more than delay the inevitable" unless longer term measures are put in place, with businesses facing up to a year's worth of rent arrears due in a matter of weeks unless the government intervenes. UKHospitality has said rent debt will reach an estimated £3b for the hospitality sector alone when it expires.
The report said the government should work proactively with businesses, landlords, banks and other stakeholders to identify an appropriate long-term solution to the problem and put forward the suggestion of converting certain existing businesses' Covid loan debt into grants to support businesses.
It also said that, in his Budget, chancellor Rishi Sunak "must give businesses and workers the security and certainty they need by extending the existing package of measures and committing to phasing them out only when the easing of health restrictions allows" and providing "reasonable notice and detail of impending changes to health and business restrictions".
Kate Nicholls, chief executive of UKHospitality, said: "The report of the BEIS Committee is hugely important and extremely timely. It is right to highlight that the Budget should focus further support on those sectors that need it most. As businesses begin to look to reopening, they are encumbered with a millstone of debt around their necks, holding back their revival, investment and job creation potential.
"We have worked proactively with government on finding long-term solutions to the rent debt situation but it is clear that more radical action is needed. This needs all stakeholders to appreciate that they will need to take their share of the pain. Hospitality businesses cannot be expected to pay full rent in a year in which they have been either shut or heavily restricted. The first step is an urgent extension of the rent moratoria to allow time to find solutions.
"The proposal to look into converting loans into grants to facilitate future growth is an interesting one and could be a major boost to small- and medium-sized businesses who are struggling under huge amounts of debt."