COVID-19: Chancellor announces financial relief package to boost economy and protect businesses

Please Note: All information correct at time of writing on 17 March 2020. We do our very best to make sure our information is as up to date as possible, but we’d encourage you to check out our latest articles and to check the government website for updates as they happen.

Chancellor Rishi Sunak, alongside Prime Minister Boris Johnson, today made a series of announcements largely aimed at providing financial relief for business and to prop up the economy as the spread of COVID-19 continues.

We know that there will shortly be an announcement of employment support measures, that are currently being worked on with unions and various business organisations.

Here, we’ve gathered the most important points for business owners and employers to make a note of as the progress of the virus unfolds.

  • The Prime Minister said that while the measures announced to date have been extreme, the government may have to go ‘further and faster’ in the coming days to protect lives and the NHS.
  • The Chancellor said that this was an economic emergency as well as a public health emergency and it will require previously unimaginable direct intervention by the government.
  • The government will make available an unprecedented £330billion of government-backed and guaranteed loans to support businesses. This means any business which needs to access credit, will be able to do so on attractive terms. If demand is greater than £330billion, the government will go further to and provide as much as is required.

The financial support from the government will be delivered in two ways:

  1. For larger businesses, the government have agreed with the Governor of the Bank of England a new lending facility to provide low cost, easily accessible credit.
  2. For SMEs, the government are extending the business interruption loan scheme introduced last week so that this will now to be able to provide loans of up to £5million rather that the £1.2million announced last week. There will be no interest due for the first six months.

Both schemes will be up and running from the start of next week. Keep an eye on our website for updates when more details of these schemes are announced.

Further changes announced included:

  • A separate scheme of support will be available for airlines and airports, which is being worked upon currently.
  • The government is holding meetings with sectors particularly affected to canvass ideas on further ways the government can support them, including ‘regulatory forbearance’. The Chancellor stressed that he was working with unions and business to develop a “bold and ambitious employment support package”.
  • The chancellor has confirmed for those businesses in the hospitality sector who do have pandemic insurance, that the government’s action is sufficient to allow them to make a claim against their policy. Many businesses do not have such insurance and therefore for businesses in the hospitality, retail and leisure sectors with a rateable value of less than £51,000 (who benefited from the business rates holiday announced last week), they will receive an additional cash grant of up to £25,000 per business to help them get through this. In addition, the business rates holiday will be extended to all businesses in these sectors, regardless of their rateable value.
  • For businesses who do not usually pay business rates, the cash grants of up to £3000 announced last week will be increased to up to £10,000.
  • Mortgage lenders will offer a three month mortgage holiday for those who have difficulty paying their mortgage because of the impact of the virus.
In the coming days the Chancellor promised that he would go much further to protect people’s financial security and in particular, he would work with trade unions and business groups to develop “new types of employment support to help protect people’s jobs and their incomes through this period.”

During the Q&A following the formal announcement, the point was made that businesses are making decision to end contracts and lay off people now.  The Chancellor confirmed that he would urge business to wait for further details of the package to arrive before they made decisions about laying off employees. He offered reassurance that support is on its way, so they don’t have to rush into any decisions.

The  Chancellor was asked for more information on what the employment support package would look like. He said it would be a combination of new measures and an extension of existing measures. What they’re trying to achieve is to help businesses meet the fixed costs of employees’ wages without having to resort to dismissals. Whatever they chose to put into action will have to work fast and quickly.

 

Tracking the progress of coronavirus to keep your business safe

We understand that the spread of coronavirus across the UK is worrying – both for the safety of your people and business.

Our HR, Employment Law and Health & Safety experts are closely monitoring the spread of coronavirus, along with government initiatives and legislation intended to protect people and businesses – and updating our advice regularly.

If you’ve got any questions about the impact of coronavirus on your business, you can visit our Coronavirus Frequently Asked Questions, which is regularly refreshed. And if you’re considering a move to temporary homeworking, you can find our guide right here.

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