Unlike previous setbacks to the UK’s efforts to reopen its economy, the latest four-week delay on easing lockdown will not be accompanied by further support for businesses. While many companies now face extra costs, having expected the remaining Covid-19 restrictions to fall away this week, they will not be able to claim any additional financial relief during the period up to 19 July, when lockdown is now due to end.
This is problematic for many companies still struggling with the impact of Covid-19. That includes firms hit directly – those in hospitality, for instance, where the most stringent restrictions still apply – and also those indirectly affected. They may be hampered by changes in consumers’ behaviour, say, or ongoing supply-chain disruption. Across the board, businesses are conscious that the existing Covid-19 support schemes are now beginning to wind down.
In particular, the business-rates holiday that retail, hospitality and leisure-sector companies have enjoyed since the start of the pandemic will end on 30 July. From 1 July until next April, these businesses will have to pay a third of the rates they would normally pay, even if they have no income to draw on.
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July also marks the beginning of the end of the furlough scheme, with employers expected to start making a 10% contribution to the cost of the initiative, rising each month until the scheme closes at the end of September. With the Resolution Foundation estimating that 8% of British workers remain on furlough, – 30% in the hospitality sector – this will have a large impact on a broad range of businesses.
Another problem is that while businesses have, since 1 April, been able to apply for Restart Grants worth up to £18,000 to cover the costs of reopening, many firms have spent this money in the expectation of being able to return to normal trading. Now their plans have been delayed, there is no more help available.
Elsewhere, the Bounce Back loans scheme and the Coronavirus Business Interruption Loan Scheme both closed to new applications on 31 March. For those firms reaching the first anniversary of borrowing, repayments and interest are now falling due. The schemes have been replaced by the Recovery Loan Scheme, though this is less generous and flexible than its predecessors.
Don’t expect a U-turn
The big picture is that life support for ailing firms is slowly being withdrawn, even in sectors where the government insists it is not yet safe to go back to business as normal. The Treasury insists that when various support schemes were introduced or updated in March, these were deliberately designed for a timetable of easing lockdown measures that was always at risk of delays. Nevertheless, many businesses will be disappointed by the lack of additional assistance. Groups such as the Federation of Small Businesses (FSB) argue that more help is necessary, particularly in the worst-hit sectors. The FSB wants an extension of the full business-rates holiday, a suspension of the tapering of the furlough scheme, and write-offs of Bounce Back loans for some firms.
Don’t hold your breath: ministers seem determined to hold the line on their plans for withdrawing financial support. But if you are still facing Covid-19-related problems, do make sure you are getting all the help promised. Many local authorities are still sitting on substantial funding for Covid-19 grants, for example, and some banks report slow take up of recovery loans.
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