Chancellor unveils financial help for SMEs and self-employed in coronavirus Budget
Published on Wednesday, March 11, 2020
The government has announced a package of measures to help businesses survive the coronavirus crisis which has just been declared a pandemic by the World Health Organisation.
In his first Budget statement, new Chancellor of the Exchequer Rishi Sunak warned that the virus ‘will have a significant impact on the country’.
He said companies will have to cope with up to one in five employees being off-work due to coronavirus, disrupted supply chains and a downturn in consumer spending.
Acknowledging that travel and tourism businesses will be among the hardest hit, Sunak announced a temporary 100% reduction in business rates for retailers and those with a rateable value of up to £50,000 a year.
Other measures include paying statutory sick pay (SSP) from day one rather than day four to all staff advised to self-isolate, even if they don’t have symptoms, and workers will be able to get a sick note from NHS Direct to avoid the need for them to visit GPs. Companies with fewer than 250 employees will also get refunds of SSP for up to 14 days for employees with coronavirus.
For self-employed workers, Employment Support Allowance will be paid from day one instead of day eight of sick leave, and the minimum income floor on Universal Credit has been temporarily removed. Also, there will be no need for claimants to visit a Job Centre.
Businesses and the self-employed will also be given more time to pay their taxes.
Adding that some ‘good, well-run businesses’ will struggle with their cash-flow, the Chancellor also announced a new, temporary government-backed ‘coronavirus business interruption loan scheme’ for banks to provide fee-free loans of up loans of up to £1.2 million to small businesses.
Some 700,000 of businesses who are eligible for small business rates relief can also apply for grants of up to £3,000.
Sunak said the measures would help businesses ‘get through the worst of the crisis’.
“Coronavirus will have a sign impact on our economy but it will be temporary I will do whatever it takes to get our country through it,” he said.
ABTA praised the Chancellor for acting ‘quickly and decisively’ to support small businesses.
“Travel businesses are under increasing pressure and steps such as the business interruption loan scheme, the emergency cut to interest rates and support for small businesses with sickness payments for staff will provide some welcome relief and a degree of protection for at least some members in the weeks to come,” said ABTA chief executive Mark Tanzer.
“However, the measures of the Chancellor and the Bank of England which are designed to increase access to short term credit need to be turned into reality, and the Government must work with lenders to ensure the measures are effective on the ground.
“We shall continue to monitor the situation as it evolves and liaise with the Government on behalf of our members regarding any additional support measures.”
He also welcomed the Government’s commitment to review Air Passenger Duty for domestic flights, such as reintroducing a return leg exemption, and possibly increasing he number of international distance bands.
“We strongly urge the Government to do this as part of a wider reform process, acting as the catalyst for constructive discussions between industry and government about a more comprehensive overhaul of the structure of APD,” said Tanzer.
“Furthermore we are disappointed by the inflationary increase in APD announced today, which puts the UK at an even greater competitive disadvantage compared with other countries where similar departure taxes are much lower.” APD remains frozen at £13 for short-haul flights but the tax on long-haul flights will rise by £2 for economy seats and £4 for premium, business and first class seats and £13 for private flights.
Manchester Airport Group CEO Charlie Cornish said: “Many airlines are looking to invest in the UK, and the Government should support them with an immediate cut to APD while it carries out its fundamental review of aviation taxes.”
Abby Penston, CEO of business travel consortium the Focus Travel Partnership, said: ” I am glad to see that the Government is taking Covid-19 seriously, and I welcome the measures. Whether they go far enough is another matter.
“For the business travel sector most corporate clients have imposed some form of change to their travel policy for most destinations in the world – with only 46% of domestic trips remaining unaffected.
“Two-thirds of our TMC partners are telling us that the current crisis is having a significant impact, 19% are moderately impacted and only 14% have experienced a slight impact.
“Our TMC partners are mostly small and medium sized enterprises, so the situation is serious. Our partners are used to turning over a £1billion of business a year and are good solid businesses, however there is no doubt that the impact of travel advisories, changes to corporate travel policies and aircraft route cuts will mean an impact to all aspects of the service chain.
“Sickness within the operational aspect of the businesses is also a concern and deployment of staff from their offices to self-imposed isolation are all areas for consideration for a TMC.
“So the sick-pay rebates, the loan scheme, the abolishing of business rates for small retailers and small business rates relief all look good in principle, but we have yet to see the detail, which will be what counts.
“But working so close to airlines, we were all also hoping for APD cuts – even if it was temporary – and there has been no sign of this.
“We know that both suppliers and customers will be looking for more favourable terms – which could create a further squeeze, so it’s possible that our sector take advantage of the banks offers of providing payment holidays on loans.”