Rishi Sunak’s emergency rescue plan to extend financial help for businesses has kept some firms happy, but others accused the Chancellor of ‘robbing Peter to pay Paul’.
Rishi Sunak shared his ‘Winter Economic Plan’ today, which provided an update on the new jobs support programme due to replace the furlough scheme among other policies designed to employment and businesses.
While the loan and VAT cut extensions have been welcomed, small business support organisations and many business owners still feel not enough is being done.
This is particularly the case for those bearing the brunt of lockdown, the self-employed, freelancers and contractors, and the leisure and hospitality industry, including pubs and restaurants and the performing arts.
Many small businesses were forced to close following the nationwide lockdown and though their doors have reopened, some are still struggling to get back on their feet
The headline announcement was the introduction of the Jobs Support Scheme which replaces the furlough scheme and will start in November, lasting for six months.
The scheme will only apply to ‘viable jobs’ which means employees must work at least one third of their hours and be paid accordingly by their employers.
The Government and the employer will then pay a third each of the remaining hours not worked, meaning those working a third of their usual hours will receive at least 77 per cent of their full pay, with 22 per cent of that contributed by the Government.
The Chancellor also emphasised that support will be targeted at ‘firms that need it most’, meaning all SMEs will be eligible. They will not have to prove that their turnover has fallen to use the scheme, whereas big businesses will.
The grant will be capped at just under £700 per month for every employee and firms will not be allowed to make staff redundant while they are on the scheme.
Other announcements included an extension of the 5 per cent VAT cut for the tourism and hospitality industries until 31 March and an extension for applications for the coronavirus loan scheme.
Enterprise Nation’s Jones said today’s announcements will be largely well-received
Emma Jones, founder of small business network Enterprise Nation, said today’s plan will be gratefully received by small businesses.
‘While we’re waiting to find out the all-important detail, it’s helpful to hear there are new measures in place that will smooth the cliff edge we were all dreading and the inevitable increase in unemployment we face before Christmas,’ she said.
‘However this is an acute crisis and what is clear is that the Government will not be able to save every business.’
Despite the new packages announced today, is likely that many firms within the hospitality sector will still suffer, as they are hit by latest lockdown restrictions.
This includes a the introduction of a curfew which will be enforced from today and means pubs and restaurants must close at 10pm every night.
In addition to extra rules around table service that will make it harder and more expensive to operate and serve customers.
Matthew Ingram, founder of Northampton-based restaurants The Smoke Pit and Hops and Chops, said this development was ‘obscene’.
‘My employees can’t pay their rent if they have to finish working half way through their usual shift,’ he said.
‘It’s all well and good extending the VAT cut beyond January but that doesn’t help my 45 members of staff who won’t be able to pay their bills. The Government have robbed Peter to pay Paul.’
Matthew said he has been frustrated by the constant changing of the rules and that he is worried about the UK going into a second lockdown.
‘We closed in March, reopened and had to restructure, had to deal with a surge of people on Mondays to Wednesdays and now have to close at 10pm. It’s obscene.
‘I am absolutely worried about a second lockdown. We had to readjust and focus on doing takeaways but it was a novelty before and people were happily ordering in. It’s going to be harder this time.
‘The idea of not getting through this is niggling in the back of my mind but I like to believe I am an entrepreneur and have what it takes to be flexible.’
Anything that can help with cashflow is welcome
Fortunately, some small businesses have managed to fight through the pandemic and stay afloat, and many are grateful for the Government support they have been able to receive.
Gareth Austin-Jones, co-founder of women’s footwear company Cocorose London, was able to take a Government Bounce Back Loan which he said has been like ‘the world’s best trade loan’.
As an example of a company that has benefited from the loan, he hopes the extension announced today will mean other small businesses will also get the support they need.
Women’s footwear company Cocorose London is one of the small businesses that has benefited from Government support during the coronavirus pandemic
He said: ‘It’s the potential for a cheaper line of credit. Anything that can help with cash flow should be welcome.
‘The VAT cut doesn’t impact us but I can imagine it will be useful for those businesses that it does.’
Cocorose struggled when the economy was first thrust into lockdown, and the company saw all its orders cancelled as shops were being forced to close.
However it used this as an opportunity to focus on its online offering and even pivoted to launch new products including face masks and comfortable footwear more suitable for staying at home.
Gareth added: ‘From a business point of view, I’m not that worried about a second lockdown. We’ve been through the initial shock.
‘The Chancellor’s solutions and delivery has helped a lot of businesses. I feel the interest in small businesses deteriorated after David Cameron’s resignation but Rishi Sunak is helping bring that back.’
Nik Antona, national chairman of pubs champion the Campaign for Real Ale (Camra), added: ‘The Jobs Support Scheme is a welcome announcement – we are glad that the Chancellor has listened to industry calls for action on jobs.
‘However, those jobs will not exist if pubs and breweries are not viable businesses.
‘While we wait for further details, what we’ve heard does not go far enough to support pubs, especially wet-led pubs, or breweries and the wider supply chain which is going to be massively impacted by new restrictions, with job losses and potential closures before Christmas.
‘What the hospitality industry needs is a support package including an extension of the business rates holiday, grants rather than loans, consideration of a differential rate of duty on draft beer served in pubs and real support for wet-led pubs which cannot benefit from the VAT cut extension.’
The live events industry has been hit hard with live concerts, gigs and festivals all cancelled
Meanwhile, the live events industry has also been hit hard with employees – many of whom are freelance – unable to go back to work or repay loans without events.
Some 49 per cent of businesses within the sector have furloughed 90 to 100 per cent of staff and so hopes of financial support through Rishi Sunak’s announcement have been dashed with furlough set to run out next month.
Peter Heath, co-founder of campaign group #WeMakeEvents, said: ‘The live events industry welcomes the announcement of Sunak’s new job support scheme but with the increased restrictions, it’s looking unlikely we will be able to return to work in a way that is financially viable over the next six months.
‘There’s simply no work to return to, with demand drying up in line with social distancing measures.
‘As a result, the majority of businesses in our sector will not be able to generate sufficient revenue to support their contribution towards employees’ salaries, nor will they be able to contract the huge self-employed community the events industry has become so dependent upon.’
The self-employed, freelancers and contractors, and not just those within the live events industry, are among those who feel cast aside by the Government since the lockdown was first implemented.
Sole traders who have previously made profits of more than £50,000, on which tax will have been paid in full, got no help from the previous self-employed scheme and will continue to receive nothing. That comes despite neither the furlough or job support scheme having an upper wage cap for qualification.
Meanwhile, millions of people working for themselves via their own limited company have had very little to no support over the past six months.
Federation of Small Businesses’ national chairman Mike Cherry, said: ‘We are concerned that the Chancellor had nothing to say today on support for those who were left out of the first round of support measures, not least the newly self-employed and company directors.
‘The Government urgently needs to come forward with an emergency relief package for these groups which have dutifully paid their taxes and deserve help too.’