Rishi Sunak announces £4.5 billion in lockdown business support
The Chancellor yesterday pledged more handouts to businesses funded by soaring Government borrowing following Boris Johnson’s decision to trigger a third national lockdown across England. Mr Sunak’s latest measures will also include a £594million emergency fund for councils to support other struggling firms in their areas. And he refused to rule out extending the furlough scheme beyond April to partly fund the wages of workers at closed firms.
However, some expressed dismay at the absence of plans to extend the current business rates holiday beyond April, with the head of the UK hospitality trade group calling the measures a “sticking plaster”.
Announcing his latest move, the Chancellor said: “This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can return when they are able to reopen.”
When quizzed about the future of the furlough scheme, the Chancellor insisted the next Budget will be a chance to “take stock” of the Treasury’s business support measures.
“We’ll have a Budget in early March…and set out the next stage of our economic response to coronavirus at that point,” he said.
The new measures take the cost of the Government fight against Covid to over £300billion.
The Chancellor pledged more handouts to businesses funded by soaring Government borrowing
Under his latest intervention, businesses in the retail, hospitality and leisure industries are to receive a one-off grant worth up to £9,000.
Thousands more pubs, restaurants and other hospitality firms are being forced to close under the new lockdown rules which came into law early this morning.
Treasury officials said the cash will be provided on a per-property basis to support businesses through the latest restrictions, and is expected to benefit over 600,000 properties.
In total, the grants are expected to cost taxpayers £4billion, with the size of grants determined by the rateable value of the premises.
Smaller pubs, restaurants and other outlets will be able to claim up to £4,000; medium-sized ones £6,000.
Smaller pubs, restaurants and other outlet will be able to claim grants up to £4000
Mr Sunak is also providing £594million to local authorities and the devolved administrations in Scotland, Wales and Northern Ireland to support other businesses that might be affected by the restrictions but are not eligible for the grants.
According to real estate specialists Altus Group, 401,690 non-essential shops, 64,537 pubs/restaurants, 20,703 personal care facilities and 7,051 gyms and leisure centres are now closed.
Mike Cherry, chairman of the Federation of Small Businesses, said: “For many it just won’t be enough for businesses who are already under the cosh and on the brink.
“These funds come after a disappointing festive period, are followed by a last-minute lockdown and do not go far enough to match the scale of the crisis that small firms are facing.”
Kate Nicholls, chief executive of trade group UKHospitality, warned the new measures are “only a sticking plaster” for immediate issues, and called on the Chancellor to announce a longer-term economic plan.
She said: “While this announcement is most welcome, make no mistake that this is only a sticking plaster for immediate ills – it is not enough to even cover the costs of many businesses and certainly will not underpin longer-term business viability for our sector.
“To address the inevitable and existential challenges that hospitality faces, we need confirmation of extensions to the business rates holiday and of the 5 percent VAT rate.
“On its own, today’s support is not enough.”
Emma McClarkin, chief executive of the British Beer & Pub Association, said the measures are expected to be worth about £277million to UK pubs and see “many pubs through
However, she added: “The Government now must also provide the same levels of support to brewers who have suffered months of closure of a major trading channel in pubs, but are not eligible for the support announced today.”
The financial handout has been described as ‘a sticking plaster’ for immediate issues
Roger Barker, of the Institute of Directors, said the Chancellor must beware a spring “cliff edge” in business support as the furlough scheme and other support measures unwind.
Adam Marshall, director general of the British Chambers of Commerce, said: “While this immediate cash flow support for business is welcome, it is not going to be enough to save many firms. We need to see a clear support package for the whole of 2021, not just another incremental intervention.”
Rachael Robathan, Westminster Council leader, whose authority covers London’s West End, said: “We now need urgent clarification that the business rates holiday will be extended and the right formula for grant help is there for businesses to survive the long haul. The economy of Westminster and the West End matters to the UK and if we don’t get the right measures in place now, the damage to this international shop window for Britain will be significant.”
Mr Sunak will hand out a £594million emergency fund for councils to help struggling firms
Meanwhile, warnings over a double-dip recession have ramped up as experts predict the economy will plunge between now and March as England is gripped by lockdown.
Experts say gross domestic product (GDP) – a measure of the size of the economy – is now set to fall in the final quarter of 2020 and first three months of 2021, plunging the
UK back into recession, as defined by two successive quarters of falling output.
The economic woes are likely to see pressure mount on the Bank of England, with speculation swirling once again over the possibility of negative interest rates in the UK.
JP Morgan economist Allan Monks predicts the latest Covid measures will see GDP slump by around 2.5 per cent in the first quarter of 2021.
Comment by Kate Nicholls
AS 2020 came to a close, we were all looking forward to the new year with a sense of optimism and a real eagerness to return to normality.
The new lockdowns in England and Scotland have seen that optimism evaporate pretty rapidly.
With the outlook for hospitality so bleak, any announcement of further financial support is to be welcomed.
Businesses need every bit of help they can get and we all need to savour positive news whenever we can. So, it was encouraging to hear the Chancellor confirm further support for our sector yesterday.
‘The Chancellor has to provide some sort of commercial certainty’
It was particularly pleasing to see him recognise the importance of supply chain businesses that have also been devastated over the past 10 months.
The sad reality is that many businesses are now past the point of no return.
Even with the announcements of one-off support grant payments yesterday, the lean Christmas period followed by going into another lockdown is going to be a bridge too far for some. We will certainly see hospitality businesses close in the first part of 2020 and job losses as a result.
Short and medium-term business viability is a huge concern for our sector, never mind long-term.
January is going to be a critical month and businesses need some sense of stability desperately.
We need an extension to both the business rates holiday and the period of a five per cent VAT rate, and we need it confirmed immediately. This will give businesses a chance to budget and prepare and increase their chances of survival for the next few months.
The additional support announced yesterday gives immediate relief but will not underpin businesses for long enough or allow them to better plan for survival and to save jobs.
We need a long-term economic plan and any shred of stability we can get. The Chancellor’s Budget is set for March 3, which is eight very long weeks away for struggling businesses.
Bringing it forward to make the announcements on how businesses can be supported is now a necessary step.
The Chancellor has to provide some sort of commercial certainty, otherwise we are only going to see more hospitality businesses die and further redundancies.