As UK businesses continue to battle the impact of coronavirus and attempt to prevent its spread, the Government announced a new package of measures on Friday to protect jobs and income. The news came as entertainment and hospitality venues, including bars and restaurants were instructed to close.
Amongst these measures is a new Coronavirus Job Retention Scheme that will be set up to help pay people’s wages. Employers will be able to contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working during the coronavirus outbreak. Any employer in the country will be eligible for the scheme.
The Government will pay up to 80% of a worker’s wages, up to a total of £2,500 per worker each month. These will be backdated to 1st March and will be initially open for 3 months, to be extended if necessary. The Coronavirus Job Retention Scheme’s first grants are expected to be paid within weeks.
Additionally, VAT bills from now until the end of June, will be deferred until the end of the tax year. No VAT registered business will have to make a VAT payment normally due with their VAT return to HMRC in that period. Income tax payments due in July 2020 under the Self Assessment system will be deferred to January 2021, benefitting up to 5.7m self-employed businesses.
Government has also revealed that the Coronavirus Business Interruption Loan Scheme, launched at Budget, will now be interest free for twelve months, the loans will be available starting on Monday, and that the standard rate in Universal credit and Tax Credits will be increased by £20 a week for one year from April 6th.
There will also be almost £1bn of additional support for renters, through increases in the generosity of housing benefit and Universal Credit. From April, Local Housing Allowance rates will pay for at least 30% of market rents in each area.
Chancellor of the Exchequer Rishi Sunak said: “We continue to do everything possible to protect the public from coronavirus. We have been working round the clock so that we can today confirm an unprecedented package of support to protect people’s jobs and wages. And we’re strengthening our safety net at the same time.
“I said we would help individuals, businesses and the most vulnerable through this outbreak and I meant it. We will do whatever it takes in the weeks and months ahead.”
Work and Pensions Secretary Therese Coffey said: “We will do whatever it takes to protect the most vulnerable and get them through these unprecedented times, and the changes we are making to Universal Credit will help millions of people in most need.
“We are standing by those who rely on the welfare safety net as we work towards turning the tide on this disease and moving on together.”
Business Secretary, Alok Sharma, said: “We have committed to doing whatever it takes to support businesses and households through these unprecedented times, and today shows just how far we are willing to go.
“This intervention is unheard of in peacetime, but it is crucial we stand behind our businesses and those that rely on them for work and income.”
The closure of entertainment and hospitality businesses meanwhile is to be reviewed on a monthly basis, and will not affect supermarkets or retailers that supply fuel, medicines and other vital goods. The following businesses have been asked to close:
- Food and drink venues for consumption on-site, such as restaurants and cafes.
- Drinking establishments, including pubs, bars, nightclubs.
- Entertainment venues, including cinemas, theatres, concert halls, and bingo halls.
- Museums and galleries.
- Spas, wellness centres and massage parlours.
- Casinos and betting shops.
- All indoor leisure and sports facilities, including gyms.
This measure will not impact the relaxation of planning rules announced earlier this week which will allow pubs and restaurants to operate as hot food takeaways during the coronavirus outbreak.
Responding to the latest measures Dame Carolyn Fairbairn, CBI Director-General, said: “This is a landmark package of measures for business, people and jobs. The Chancellor’s offer of substantial payroll support, fast access to cash and tax deferral will support the livelihoods of millions. Firms and employees will respond with relief and determination.
“It marks the start of the UK’s economic fightback – an unparalleled joint effort by enterprise and government to help our country emerge from this crisis with the minimum possible damage. An important day for our country.”
Eddie Williams, Midlands Chair of insolvency and restructuring trade body R3 and a partner at Grant Thornton in the East Midlands, said: “The measures announced today are a positive step and will go some way in providing businesses with the financial help they need to support and retain their staff and weather the economic storm.
“Once the crisis phase of this is over, businesses will need to rebuild and their staff will play a crucial part in this. The support package the Chancellor has set out today will hopefully enable them to hold on to the talent that will drive their recovery, as well as providing a financial lifeline for many employees facing a period of great uncertainty and turmoil.
“However, time will tell whether this package is enough. Detail on how this package of support will affect those who are self-employed or on zero hours contracts is needed as these groups are particularly financially vulnerable in the current climate.
“As well as support for maintaining employment, other help is needed. The VAT payment holiday is welcome, but the same could be done for other taxes.
“Despite the support the Government is providing, we are aware that this is a worrying time. Any directors or business owners whose businesses are in difficulty or are starting see signs it will struggle should seek professional advice as early as possible. Early advice and early discussions with creditors give a business more options to find and implement solutions to the challenges they face and begin to address issues like rearranging payment terms.”