One of Britain’s most high profile restaurant investors has warned that we may not be protecting the NHS as the coronavirus lockdown risks a “1930s-style depression”.

Luke Johnson, co-founder of private equity firm Risk Capital Partners, who is best known for building up the PizzaExpress and Giraffe restaurant chains says thousands of companies across sectors face going under before the government's help can reach them.

The former Patisserie Valerie and Channel 4 boss questioned whether the price being paid in the lockdown might be worse that the cure.

"Who knows," he said. "But we could be facing a downturn that is not just an average recession but is closer to the great depression of the 1930s. And if you look at the misery and ill health that caused and damage to society as a whole, then I think there is a serious debate to be had about whether we are just relentlessly pursuing the right course of action.

"The longer the shutdown continues, the more industry will shutdown and become insolvent. There is a terrible trade off the country will have to make sometime in the future over the damage to our whole standard of living and whether we are willing to accept the suicides and the collateral damage from the shutdown, as opposed to protecting the NHS so it can keep people with the virus alive.

"The thing is to ramp up testing to then work out what the fatalities are, work out who is immune, and try to re-open society because ultimately if the country gets into a very serious financial position, we won't be able to afford a decent NHS, so ultimately that won't protect the NHS at all if the economy crashes."


His warning comes as new research showed that a fifth of all small and medium-sized businesses in the UK are unlikely to get the cash they need to survive the next four weeks, in spite of unprecedented government support.

A study from a network of accountants suggests between 800,000 and a million firms nationwide may soon have to close.

Many companies have been refused emergency loans, while banks are saying they are following the rules set out by the government.

Chancellor Rishi Sunak said two weeks ago that businesses would be able to walk into bank branches and discuss Coronavirus Business Interruption Loans (CBILs) of up to £5m to help them survive the shutdown.

The promise from the chancellor was that "any good business in financial difficulty who needs access to cash to pay their rent, the salaries of their employees, pay suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms".

Mr Johnson warned that government support money is not getting through yet.

"The earliest will be later on this month, and it might not be till May. For some businesses that will be too late because companies will not be able to pay colleagues for the March payroll let alone April," he said.

"Time is of the essence and people need that money just to live."

He claimed banks were struggling to adapt their systems to deal with the new paperwork from the government.

"There are concerns at the idea they are being forced to lend to companies, given all the uncertainties, they wouldn't want to lend to even though they are getting an 80% underwriting from the government, while the other 20% they are on risk for," Mr Johnson told Sky News.

"They are probably avoiding taking on that risk where they can. The banks are concerned about bad debts and ultimately their own solvency.

"So they are not going to be willing to lend to businesses that are likely to go bust anyhow.

Mayor of London Sadiq Khan echoed his sentiment, saying "banks have got to step up" to help small and medium-sized businesses survive during the coronavirus pandemic.

A Scottish Government spokesman said: “We recognise that the spread of the Coronavirus has raised concerns for a wide range of workers over issues like social distancing and the availability of protective equipment. It is to protect the NHS and save lives that we have put in place restrictions on all individuals and organisations in Scotland requiring them by law to follow necessary social distancing measures to slow the spread of Coronavirus.

“Where concerns remain, we are discussing with councils and trade unions the right way forward that protects workers and maintains essential public services. As part of this effort, adopting a Fair Work approach is more important than ever. The Cabinet Secretary for Economy, Fair Work and Culture has already written to all Local Authority Chief Executives and COSLA urging them to reflect on this and act accordingly.”

Accountancy group Corporate Finance Network, after analysing the government help on offer, said that 18% of their clients were unlikely to get access to the cash they will need to survive a four-week lockdown.

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