Bosses buoyed by new UK virus support plan

What business support has Chancellor of the Exchequer Rishi Sunak unveiled?

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David Sapsted

24 September 2020

Leaders of the UK's largest business organisations breathed an almost audible sigh of relief after Chancellor of the Exchequer Rishi Sunak unveiled a jobs support scheme to help companies and their workers through the crippling effects of the coronavirus epidemic.

New UK coronavirus business support measures

With the government's furlough scheme due to end next month amid employers' fears growing that it would result in millions losing their jobs, Mr Sunak announced new measures on Thursday afternoon that included:

government subsidies for the pay of employees at SMEs able to work only a third of their normal hours. Starting in November, the government will pay for another third of their normal wages, capped at £697.92 a month, as long as employers pay the outstanding third. Larger businesses will only qualify under the scheme if their turnover has fallen because of Covid-19.
repayment of so-called 'Bounce Back' business loans and Coronavirus Business Interruption Loans will be extended from the current maximum of six years to 10 years.
the emergency 5% cut in VAT (to 15 per cent) for the tourism and hospitality industries will be extended from January next year to March 31.

Dame Carolyn Fairbairn, director-general of the Confederation of British Industry responds

Responding to the new measures, Dame Carolyn Fairbairn, director-general of the Confederation of British Industry (CBI), said: “These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter. It is right to target help on jobs with a future, but can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery. “Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Further business rates relief should remain on the table."Dame Carolyn said employers would apply "the same spirit of creativity" as the chancellor by seizing opportunities to retrain and upskill their workers. “The chancellor has listened to evidence from business and unions, acting decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal,” she added.

Miles Celic, CEO of TheCityUK responds

Miles Celic, CEO of the financial services lobby group TheCityUK said the new package of support was essential to sustaining SMEs and jobs across the country."We are pleased the chancellor has taken action to address the significant and urgent debt challenge facing SMEs highlighted by our recapitalisation group," he said."By extending further relief to those SMEs with government-guaranteed loans, the government will help to preserve many viable firms, allowing them the chance to return to growth after the pandemic has passed. Matching repayments to the ability of companies to recover demonstrates that government has listened to the advice of industry and business groups who are working closely with companies across the UK economy.“Looking further ahead, we urge the government to give further thought to how to unlock greater equity investment in the UK’s SMEs across the country, vital for powering a strong and sustainable recovery.”

Jonathan Geldart, director-general of the Institute of Directors

Jonathan Geldart, director-general of the Institute of Directors, described the government's move as bringing "some relief" to company directors fearing a harsh winter for their businesses and staff.However, he said, it was not immediately clear how much the new Job Support Scheme would help hard-pressed firms hold on to staff."The chancellor may also have missed a trick by not combining the Scheme with measures to encourage wider job creation, for instance by lowering employment costs through reduced Employers' NICs (National Insurance Contributions)," he added.“Some important gaps in the support still remain. Crucially, many self-employed and small company directors continue to go without support, even as other schemes are continued. Meanwhile, with business investment in the doldrums, the Treasury must act to provide reliefs for firms to spend on digital technology and skills, particularly as SMEs look to adapt to home-working." The government should also remain open to widening access to its loan schemes, and ensuring local authorities have the funding to provide grant support to firms that have been shut out of other channels."

Adam Marshall, director-general of the British Chambers of Commerce responds

Adam Marshall, director-general of the British Chambers of Commerce, felt the initiatives would give business and the economy "an important shot in the arm", pointing out that the nation's chambers of commerce had long been calling for a new generation of support to help protect livelihoods and ease the cash pressures faced by firms.“The chancellor has responded to our concerns with substantial steps that will help companies preserve jobs and navigate through the coming months," he said."The new Jobs Support Scheme will help many companies hold on to valued, skilled employees. Businesses will be eager to see the detail and consider whether and how they will be able to use the scheme.“The chancellor must remain open to taking additional action to support parts of the economy facing unprecedented challenges over the months ahead."