The UK’s nightlife scene is at risk of extinction without urgent financial support, the government has been warned.

A group of 40 cross-party MPs has urged the prime minister and chancellor Rishi Sunak to bring forward a sector-specific grant package and lay out a detailed roadmap for reopening venues to avoid “irreversible losses” for businesses.

They said a collapse of nightclubs and bars would create “ghost towns” across the country that would hinder the wider economic recovery.

A report published today by the All Party Parliamentary Group (APPG) for the Night Time Economy highlighted the impact of the measures, showing that on average businesses in the sector had made 37% of employees redundant.

Jeff Smith, chair of the APPG and a former DJ, said: “Our world-leading night clubs, pubs, bars, and live music venues are cornerstones of our communities. They drive so much economic activity both locally and nationally, and bring hope, joy and entertainment to millions across the UK.

“If the government is serious about its ‘levelling up’ agenda it must act now to save this sector and avoid untold damage to the social fabric of this country.”

It comes amid warnings that vaccine passports could risk shutting young people out of late night bars and clubs until the autumn.

Sector leaders said requiring proof of vaccination before entry would be “unworkable” for hospitality companies, many of which rely on the business of young customers.

The Government is understood to favour rapid testing as a more viable way to help businesses such as nightclubs reopen.

Michael Kill, CEO of the Night Time Industries Association, said: “Because people are not going to be vaccinated in age groups that we attract, the idea of vaccine passports won’t be helpful [when restrictions are lifted].

“If you are 23 you might not be vaccinated until August or September, so that doesn’t really help the industry.”

Kate Nicholls added: “If you consider where we are going to be in terms of vaccination in the working population, particularly young people won’t be vaccinated until the autumn. It’s just not workable in a hospitality setting.”

The industry has largely welcomed Boris Johnson’s suggestion that rapid testing could be the key to opening up.

Kill said an at-home negative test result could validate event tickets to avoid the “logistical issues” of queuing punters waiting for results.