Chancellor Rishi Sunak has announced the government’s coronavirus response which includes the promise of emergency aid worth £1bn backed by a “co-ordinated, coherent and comprehensive three point plan” with business at its heart.
He says the response is “temporary, timely and targeted” and has been drawn up with the help of the Bank of England which cut its rates by 0.5 points this morning.
Key measures announced include: For SMEs with fewer than 250 employees, the cost of providing Statutory Sick Pay to any employee off work with coronavirus will – for the first 14 days – be refunded by the government. This will be worth more than £2bn for up to two million businesses, the Chancellor says.
Measures include business loans, support on sick pay anD the abolition of business rates
Businesses are to get a new ‘interruption loan’ scheme guaranteed by the government Banks will offer loans of up to £1.2m to support SMEs. The government will guarantee up to 80 per cent of losses with no fees. This, he says, will be worth up to £1bn in “attractive working capital loans”.
He will also abolish business rates altogether for this year for retailers, in a tax cut worth more than £1bn. Any company eligible for small business rates relief will be allowed a £3,000 cash grant – a £2bn injection for 700,000 small businesses.
The Bank of England slashed the base interest rate from 0.75% to 0.25% this morning to shore up the economy hours after Health Minister Nadine Dorries was diagnosed with COVID-19.
Sunak told ministers at a meeting this morning coronavirus was “front and centre” and the Budget would “make the UK one of the best placed economies in the world to manage the potential impact”.
HMRC’s Time To Pay service will also be scaled up.
He said that Entrepreneurs’ Relief will be retained, but the lifetime allowance will be reduced from £10 million to £1 million, one announcement that brought immediate criticism.
Jamie Morrison, head of private client at accountancy firm HW Fisher said: “This change is as good as abolishing it completely and this is a huge mistake. While a sensible change following proper consultation would be welcomed, this is a step too far.
Should the Coronavirus outbreak worsen, just how much assistance can the Government realistically provide to help businesses and their employees?”
“By cutting the relief entrepreneurs will only be able to benefit up to £100k during their lifetime.
“This is not enough to drive support of creativity and entrepreneurship. Businesses need consistency and this budget needs to look beyond the immediate implications of coronavirus to provide a vision beyond the next 12 months.”
John Ellmore, Director of Know Your Money said moves to support the self-employed offers some assurance to those that make up the ‘gig economy’ and support to help businesses implement self-isolation measures was welcoming.
He added: “That said, we are still left wondering as to what the long-term solution will be. Should the Coronavirus outbreak worsen, just how much assistance can the Government realistically provide to help businesses and their employees?”
“Let’s not forget the financial challenges that self-isolation can also pose to workers. It is estimated there are 2,000,000 people in the UK with no sick pay who may not be able to afford two-weeks of self-isolation.”
Andrew Mawson, founder of Advanced Workplace Associates makes the point that having the odd ‘work from home’ day is one thing, but managing large numbers of people working at home for a prolonged period of time is quite another.
“There is a lot we take for granted when we’re in the office. When we’re working away, we need to consciously develop new leadership and workership practices,” he said.
“Businesses should adapt and grow or they will diminish. Whether the required change is driven by global economics, workplace cultural changes, or imminent global pandemics such as coronavirus, businesses are having to change their ways of working. Sometimes in an instant.
Businesses should adapt and grow or they will diminish. Whether the required change is driven by global economics, workplace cultural changes, or imminent global pandemics
“There are all sorts of reasons why people can’t get to the office. The trick is to recognise that home or remote working isn’t necessarily a bad thing.”
Mike Hampson, CEO, of Bishopsgate Financial said: “Have to hand it to Sunak, from business rates to investment in infrastructure to contingency funds for employees and SMEs amid Coronavirus Crisis delivering his first budget its sensible stuff by the chancellor.
“Increasing investment in R&D to a record £22bn a year, which is the fastest, and the largest increase in R&D ever higher than the US, China, France and Japan. In addition, significant investments in transport and technology infrastructure should provide an economic boost. Good news about Coronavirus loan scheme. Great support for #SME. However, will it be easy to access for SMEs to access these promised funds? As an SME getting loans could be painful, long and challenging.
“It’ll be interesting to see where the money is coming from when the details are published. This budget together with the earlier BoE interest rate cuts should combine to create a positive mood for the country in a time of uncertainty.”
Peter Webb, MD of Electronic Temperature Instruments, the UK’s largest digital thermometer manufacturer, said he welcomes the SSP announcement.
“These are unprecedented times and businesses of all sizes needed reassurance and a dose of confidence in order to stabilise their business and support their workforces,” he said. “What this does is it confirms the governments’ commitment to getting behind British business throughout this crisis and helps stabilise employment and supports productivity.”