Businesses have welcomed an unprecedented package of measures announced today by Chancellor Rishi Sunak designed to support them and their employees during and after the ongoing coronavirus crisis.
The extraordinary measures will see the launch of a coronavirus job retention scheme, allowing any employer the opportunity to apply to HMRC to have up to 80% of a member of staff’s salary paid – capped at £2,500 a month.
The payments, backdated to 1 March, will run for three months, with no limit on funding for the initiative, the Chancellor said. The timescale would also be kept under review.
Business leaders welcomed the extent and nature of the measures, although concerns have been raised about the impact of some other steps being taken as the government looks to minimise the massive disruption caused by the ongoing crisis.
The Chancellor (pictured) announced details of the plan this evening, stood alongside Prime Minister Boris Johnson who has now ordered a host of high street small businesses – including cafes, bars, restaurants, cinemas and gyms – to close until further notice.
Concerns have also been raised over how the self-employed will cope in the months ahead.
CORONAVIRUS JOB RETENTION SCHEME – KEY MEASURES
* Any employer can to apply to HMRC to have up to 80% of a member of staff’s salary paid
* Capped at £2,500 a month
* Backdated to 1 March
* Will run for three months, although that time scale will be kept under review
* No limit on funding for the initiative
* VAT for next quarter will be deferred
* Self-assessment sums deferred until January 2021
* Minimum Income Floor for sole traders claiming Universal Credit suspended
* Interest free period for loans taken out through the business interruption loan scheme extended from six months to 12
Federation of Small Businesses (FSB) national chairman Mike Cherry said: “The closure of thousands of small businesses on our high streets will threaten futures. It’s critical that the cash grants being made available to those in the retail, hospitality and leisure sectors reach them as swiftly as possible – and extension of their scope to other sectors given serious consideration.”
Cherry also said that insurers must “stand ready” to help those with business interruption policies.
He said: “The coronavirus job retention scheme marks an unprecedented intervention. Executed swiftly, it will protect livelihoods and the viability of small employers. Putting a straightforward application process in place for the scheme will be central to its success. Many small employers will today be breathing a huge sigh of relief.”
Dame Carolyn Fairbairn, director-general of the Confederation of British Industry, welcomed the Chancellor’s “landmark” package of measures for business, people and jobs.
She said: “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.
“Today 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.”
But the FSB’s Cherry expressed his concern over the fact that the job retention scheme will not be operational for a month, which would mean that many small employers are still presented with an “immediate, potentially terminal cash flow crunch”.
He said: “Therefore it’s vital that banks play their part, and ensure that any small business owner seeking a 12 month interest free loan from Monday is helped immediately – there are no excuses.”
Cherry also said that while it is “encouraging” to hear the Chancellor pledge his support for the self-employed, the government has “a long way to go to show it’s on the side of our five million-strong self-employed community.”
He said: “Over the coming days, we need to see the Chancellor map out how he will directly support the self-employed in the same way as he has committed to directly support employees.
“The question at this point is – with firms being forced to close – why have the self-employed been excluded from the commitment to pay 80% of earnings?
“It cannot be right that an employee currently earning £25,000 a year could access £20,000 per annum through the new job retention scheme, while someone who’s self-employed earning the same sum might only access around £5,000 worth of support.
“We need to see the Prime Minister’s ‘whatever it takes’ approach extended to the self-employed – that means following the lead of other nations by guaranteeing 80% of incomes for those who lose work.”