One million claim benefits amid fears jobless count will be worse than Eighties

NEARLY one million people registered for benefits in the fortnight after Boris Johnson first announced shutdown measures, official figures showed last night.

Many of the new applicants will have been made unemployed by companies which were confronted with the collapse of their businesses overnight.

Separately, a survey of small firms forecast that four million people could lose their jobs because of the pandemic, while there are fears for large companies that do not currently attract government support.

If the current rate of universal credit applications continues, by Easter unemployment could be higher than the three million last seen in the Eighties under Margaret Thatcher’s government.

Britain’s recent jobless count – which was 1.3 million before the pandemic hit – peaked at 2.5 million in early 2010 after the financial crisis.

The Department of Work and Pensions said last night that it logged 950,000 new applications for universal credit between March 16 – when the Prime Minister first demanded an end to any unnecessary travel – and March 31. One source said the figure was “simply astonishing”. There would normally around 100,000 new applicants over that length of time.

The small firms survey by Corporate Finance Network found that as many as one in five – between 800,000 and one million firms – will not be able to survive, despite support measures announced by the Government.

If the lockdown lasts three months or more, millions more jobs would go, with the group reporting that 31 per cent of small firms will have to close down their business by June.

Kirsty Mcgregor, founder of the group which surveyed 13,000 businesses, told the BBC: “Small and medium-sized businesses employing less than 250 people employ most of the workforce – 23 million people.

“We could lose up to a million of them in the next month or so. And it will be irreversible, which will be catastrophic for the UK economy.”

Business lobby groups expressed concern about the pace at which help was getting to companies.

Chancellor Rishi Sunak said two weeks ago that businesses would be able to walk into bank branches and discuss Coronavirus Business Interruption loans of up to £5 million to help them survive the shutdown. But business groups and government sources said firms were either struggling to get through to their banks by phone or being asked to put up personal guarantees to access the cash.

A Whitehall source said: “You know what banks are like. You walk in and they want to make money out of you. They don’t think, ‘I want to help you’.”

The Federation of Small Businesses said the big four high street banks had

‘Just as the taxpayer stepped in to help the banks back in 2008, we will work with the banks to repay that favour’

now stopped asking for personal guarantees to get hold of the money and said it hoped others would follow suit.

Others raised the lack of support for around 5,000 mid-cap companies that are too big for the loan scheme – which is capped at firms with turnover of £45million – and too small for Covid Corporate Financing Facility, which helps multinational companies.

The Bank of England is due to release figures today, however, sources said, that show as little as £100million out of a possible £200billion had been lent to big companies under the new facility.

One source said: “We [may] lose all the automotive sector, all of the steel sector, most retail, aviation, tourism – they can’t keep waiting for a scheme.”

Business lobby groups added to the pressure on the Government to step in.

Rain Newton-smith, CBI chief economist, said: “Speed is of the essence.”

Alok Sharma, the Business Secretary, said last night: “Just as the taxpayer stepped in to help the banks back in 2008, we will work with the banks to do everything they can to repay that favour and support… the people of the United Kingdom in their time of need.”

A Treasury spokesman said: “We’re working with the financial services sector to ensure that companies feel the full benefits from this support.”

Last night, the Treasury told The Daily Telegraph that 450 small businesses in Newcastle, 522 in Middlesbrough and nearly 1,000 in North Tyneside have received government grants of up to £25,000 – as well as 300 in London. The grants are for businesses too small to benefit from business rates relief, which came into force yesterday.