Amongst the current murky depths of rising coronavirus cases and hospital admissions and yet another lockdown, the Chancellor Rishi Sunak has provided a glimmer of light with the offer of one-off grants for businesses in the retail, hospitality and leisure sectors forced to close down again. These grants are worth up to £9,000 per property and are in addition to existing business rates relief, £1.1 billion of existing discretionary funding for Local Authorities, 100% government backed loans which have already been extended to the end of March 2021, and the furlough scheme which has already been extended to the end of April 2021.
Businesses do not have to pay the grants back and the intention is to help them weather the continuing storm through to the Spring and sustain jobs. The cash is expected to benefit over 600,000 business properties, and will be worth more than £4 billion across all nations of the United Kingdom.
To break this down further, the one-off top-ups will be granted to businesses as follows:
- £4,000 for businesses with a rateable value of £15,000 or under
- £6,000 for businesses with a rateable value between £15,000 and £51,000
- £9,000 for businesses with a rateable value of over £51,000,
with any business which is legally required to close, and which cannot operate effectively on a remote basis, eligible. Business support is a devolved policy and is the responsibility of the devolved administrations to administer and roll out. Businesses apply for the grants through their local authorities.
Another £594 million is also being made available to Councils and devolved nations to support businesses not covered by the new grants, with the Scottish government receiving £375 million, the Welsh government £227 million, and the Northern Ireland Executive £127 million. These may be businesses like market traders and home-based operators who do not pay business rates, or businesses that do not have to shut down due to the lockdown but are severely hampered in operation. Again, all such businesses should apply to their local authority to ask for support.
On the surface, this looks to be a generous package, and will go some way to helping businesses pay rents and keep staff costs under control. With these sectors already heavily bruised by a succession of lockdowns and restrictions any support is of course welcome and should be utilised in conjunction with any other means that may be available, including loans, the furlough scheme and renegotiating lease terms and obligations with landlords whether by way of re-gear or side letter, if only on a temporary basis.
However, there is a lingering feeling among small business leaders that the new financial package still does not go far enough and may not be sufficient to stop many businesses from going to the wall. In particular, business groups are lobbying the Chancellor to extend the business rates holiday so that new business rates bills for 2021/2022 do not immediately land on doormats, and to extend the cut to VAT on hospitality to 5%. Many believe the new measures just to be another sticking plaster to hold things together and that they do not provide a long term solution, especially when you consider the huge costs already incurred to date and debts being serviced just to keep businesses afloat.
It remains to be seen whether further measures are announced by the Chancellor and further cash is made available to the devolved nations. The help provided to date is of course welcome and will sustain some businesses, even if only in the short term. It is clear that further help and a much clearer plan is needed though, and in conjunction with the rollout of the various vaccine programmes, it is hoped that this will be provided sooner rather than later so that as many businesses as possible are able to survive and livelihoods and jobs are protected.
If you would like further information on the topic discussed in this article, please contact Mark Sabey by email: firstname.lastname@example.org or by phone: 0141 530 2029 / 07984 016 171 . You can also view Mark’s profile by clicking here.
The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray