The government has been urged to do more to support struggling travel companies after it extended temporary insolvency measures to further help firms during the pandemic.
Temporary insolvency measures are set to be extended by three months to September 30 to protect companies from creditor enforcement action where their debts relate to the pandemic.
Minister for corporate responsibility Lord Callanan said: “We’re extending these important measures to give businesses the extra breathing space they need as we cautiously reopen the economy and look to build back better from the pandemic.
“With the threat of aggressive creditor action and insolvency eased, companies will be able to focus all their efforts on their recovery.”
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Institute of Directors policy and corporate governance director Dr Roger Barker said: “During the pandemic, it has been essential to provide company directors with the means by which they can sustain inherently viable businesses. An important component has been the temporary suspension of the potential liability faced by directors if they continue to operate a company that is facing financial difficulties.
“During the exceptional circumstances of the pandemic, this has been an appropriate step for government to take in order to ensure that viable businesses survive and are in a position to contribute to a meaningful economic recovery.”
In response, Abta chief executive Mark Tanzer said: “While travel agents and tour operators will breathe a little sigh of relief that protection from eviction by commercial landlords has been extended, along with the other insolvency measures, they will still be gravely concerned about their financial future, and ability to retain their staff and keep their businesses going.
“The industry is effectively shut down, unlike many other parts of the economy, and yet these businesses are about to be asked to make a 10% contribution to wages of furloughed staff and pay a third of business rates, when it is government measures that are stopping them generating income.”
He added: “The government needs to recognise the unique situation the travel industry is in and take action to stop more people losing their jobs and businesses going under, by keeping furlough and business rates costs as they are.
“It also needs to take the long overdue action of providing targeted grants to the sector – travel agents could only get the lower level of general grant support and tour operators were excluded entirely.”
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