“Unprecedented Measures for Unprecedented Times” – were the words of Rishi Sunik – and for me, that encapsulates the current situation and latest announcements perfectly. This evening, the Government has announced a package of measures that it hopes will give businesses a chance to survive and ensures that millions of individuals will continue to receive wages.
While pubs, bars, restaurants and other places of social interaction will close, those business and every other business in the land has been offered a lifeline. The “Corona Virus Job Retention Scheme” will allow businesses of any size or sector to apply to HMRC for a grant which will fund 80% of employees’ wages up to £2,500 per month. The scheme will be backdated to 1 March 2020 and it is hoped it will be in place before the end of April. This is literally hot off the press, so we will have to await further details, and the criteria which I will analyse and report on in due course. The key message, however, is that businesses do not need to immediately lay off staff, or cut their hours, the grant will be available to keep people in employment.
In these unprecedented and largely dark times, there have been moments of solidarity and community spirit beyond anything witnessed in my lifetime. In-between fights over toilet roll and pasta, we have seen support groups being established, communities pulling together and businesses adapting to provide home deliveries. These sentiments were echoed by Mr Sunik who referred to a “collective national effort”, “standing together” and a “generation defining moment”.
In addition to the Job retention Scheme, organisations will be permitted to defer next quarters VAT payment until the end of June 2020 and the business loans announced earlier in the week will be available from Monday. These cash flow friendly initiatives could be the difference between survival and shutting up shop in the short terms, but business owners will need to have one eye on further down the line because those payments will still need to be made eventually. We will have to watch this space in terms of the impact of these measures and how the Government can afford them; but for me the measures went much further than I envisaged and should be welcome relief to many in these unprecedented times!
James Twine – Partner & Head of Business Services