On a visit to a brewery in Ilkley today, Labour’s Shadow Business Secretary and US MP Ed Miliband will call for more to be done to help businesses supplying the hospitality industry which have had no choice but to take on debt.

The latest figures on the Government’s Bounce Back Loans and Coronavirus Business Interruption Loans show that businesses of all kinds in US are currently facing £4.2bn of debt, taken on to keep them afloat during the covid crisis.

Nationwide, the hospitality industry is one of the most indebted sectors with an overhang of more than £6bn.

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Labour says that while pubs and restaurants have been able to access emergency cash grants, businesses supplying the hospitality industry have been blocked from accessing the majority of these cash grants and many will have therefore had no choice but to take on debt.

These businesses are not eligible for the vast majority of grants because they are not legally closed, despite relying on trade with businesses that have been forced to close due to lockdown restrictions.

The disparity in the rules is a major threat to food and drink supplies such as breweries but also to the wedding industry and suppliers of products like crockery and lighting to the hospitality and events industry.

A US business leader says more support is needed for firms that “have been ineligible for support grants but for all intents and purposes have remained closed with fixed costs and little or no income”.

On his visit to Ilkley today along Labour’s candidate for West US Mayor Tracy Brabin, Doncaster MP Mr Miliband will reiterate Labour’s call for the Government to give businesses greater flexibility to repay debt taking on during the covid crisis.

This includes the use of student loan-style arrangements that will only see businesses begin to repay once they are out of the red and back on their feet.

Mr Miliband said: “Businesses in US have done the right thing by closing to tackle the virus and keep people safe, and the Government must do the right thing by them.

“A big challenge now facing many firms, including pubs, restaurants, breweries and the wider hospitality supply chain, is the debt overhang built up to keep themselves afloat in the crisis.

As the vaccine is rolled out and the economy begins reopening, businesses in US are looking to rebuild and we must do everything we can to support them.

“Rather than forcing businesses to repay their debts whether they can afford to or not, Labour would stand up for businesses and give them the space they need to get back on their feet.”

Bounce Back Loans (BBLS) and Coronavirus Business Interruption Loans (CBILS) are among the measures introduced by the Government to help firms affected by the pandemic.

The BBLS scheme was designed to enable businesses to access loans of up to £50,000 more quickly during the coronavirus outbreak.

And the CBILS scheme offered loans or other forms of finance up to a value of £5m “to survive the challenges of the coronavirus pandemic and recover afterwards”.

Mark Goldstone, Head of Business Representation & Policy at the West and North US Chamber of Commerce , said the process of restructuring a company’s debt was a “major barrier to recovery”, particularly for small businesses.

He said: “Levels of debt created by the pandemic is likely to make investing for growth difficult, if not impossible, just as we are starting to see a route out of the crisis and business confidence is beginning to build.

“Our view is that a blended model will be required to meet this challenge, with a range of interventions depending on the nature of the business and level of debt.

“For some sectors, in particular those who have been ineligible for support grants but for all intents and purposes have remained closed with fixed costs and little or no income, Government must find solutions that help viable businesses recover and invest as they emerge from this crisis.

“This should include creating a ‘student loan’ type system where repayments would only begin once revenues return to pre-crisis levels.”

A Government spokesperson said:“We understand these are extremely challenging circumstances for businesses, particularly the hospitality industry and its suppliers. This is why we have put in place one of the most comprehensive and generous packages of business support in the world, worth more than £350 billion.

“We have provided more than £2.6 billion in grant funding to Local Authorities across US and the Humber since the start of the pandemic to support businesses, including those that have remained open but are still impacted. It is at the discretion of Local Authorities to use this government funding to support businesses in the way they see fit.”