The chancellor, Rishi Sunak, yesterday announced new support for business and workers, in order to help protect them against the economic emergency being caused by the coronavirus. It included unlimited loans and guarantees to support firms and help them manage cashflows through this period. The chancellor will make available an initial £330bn of guarantees, which is equivalent to 15% of UK gross domestic profit.
Sunak said: “We will do whatever it takes to protect our people and businesses from the effects of this global economic emergency brought on by the coronavirus pandemic. The interventions I am setting out today will help support businesses of all sizes, so they can continue operating during these unprecedented times.”
At last week’s budget, the chancellor pledged to provide £30bn of support to the economy to deal with the crisis by investing in public services, increasing support for vulnerable people and providing business with tax reliefs and loans. He said he would take further action as the situation evolved and outlined further measures including, in order to ensure that businesses have access to the funds they need:
Support for liquidity among large firms, with a major new scheme being launched by the Bank of England to help them bridge coronavirus disruption to their cash flows through loans.
Increasing the amount businesses can borrow through the Coronavirus Business Interruption Loan Scheme from £1.2m to £5m, and ensuring businesses can access the first six months of that finance interest-free, as government will cover the first six months of interest payments.
Including new legal powers in the Covid Bill, enabling the government to offer whatever further financial support it thinks is necessary for businesses.
Sunak also pledged to provide £20bn of business rates support and grant funding to help the most-affected firms manage their cashflow through this period by:
Giving all retail, hospitality and leisure businesses in England a 100% business rates holiday for the next 12 months.
Increasing grants to small businesses eligible for Small Business Rate Relief from £3,000 to £10,000.
Providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000.
Mortgage lenders have also agreed to support customers that are experiencing issues with their finances as a result of Covid-19, including through payment holidays of up to three months. This will give people the necessary time to recover and ensure they do not have to pay a penny towards their mortgage in the interim.
Confirmation was given that government advice to avoid eateries, pubs, clubs and so on is sufficient for businesses to claim on their insurance where they have the appropriate interruption cover for pandemics in place. To support the food industry and help provide meals for people who need to self-isolate, the government will relax planning regulations to allow eateries and pubs to start providing takeaways without a planning application.
Kate Nicholls, CEO of UKHospitality, said: “The chancellor has clearly been listening and these extra measures represent proper progress on last week’s budget. The focus now has to be on making sure that hospitality businesses can draw down the support loans and other funds while they still have businesses to operate, such are the levels of urgency for most businesses.
“We will wait with great anticipation and hope that the detail on employment support measures live up to the hype but, if they are substantive, this could amount to a really helpful raft of support. This needs to come urgently as jobs are being lost every day. Cashflow is the key focus for companies endeavouring to survive. We only hope that this can be enough.”