New COVID-19 support announced by the Chancellor may “not be enough to save many firms”
The UK population is being asked to stay at home once more after the Prime Minister announced a third COVID-19 lockdown in England, with Scotland, Wales and Northern Ireland also under similar restrictions.
The measures, which will see the UK plunged into a lockdown with rules similar to those in March last year, come amid a surge in Coronavirus cases and is expected to last until at least mid-February.
In light of the latest lockdown, Chancellor Rishi Sunak announced a new business support package worth £4.6 billion in grants.
It includes a one-off top-up grant for businesses in the retail, hospitality and leisure sectors of up to £9,000 per property. £594 million has been pledged to businesses in other sectors impacted by the new restrictions.
COVID-19 support package needed “for the whole of 2021”
Speaking on 5th January, Sunak said: “Throughout the pandemic, we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the spring.
“This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”
However, the new package fails to address the gaps in support and many professional bodies are now extremely concerned at the number of businesses, including freelancers, contractors and the self-employed, that may not survive.
Adam Marshall, Director General for the British Chamber of Commerce, said: “While this immediate cash flow support for business is welcome, it is not going to be enough to save many firms. We need to see a clear support package for the whole of 2021, not just another incremental intervention.
“The government must move away from this drip-feed approach and set out a long-term plan that allows all businesses of all shapes and sizes to plan, and ultimately survive.”
Lockdown could see “spring cliff-edge”
“Many smaller firms won’t qualify for the full headline amounts set out in the Chancellor’s statement, and will be left struggling to see how this new top-up grant will help them out of their cashflow problems.
“Support must be sufficient to cover not just those on the front line of retail, hospitality and leisure, but also firms in supply chains and wider business communities who are also feeling the devastating impacts of these restrictions.”
The Institute of Directors (IOD) has warned the Chancellor that businesses could face a “spring cliff-edge” when the “furlough scheme and other support measures unwind”, if there is no long-term strategy.
This latest announcement is also likely to have knocked business confidence further, with many companies putting projects on hold and becoming reluctant to invest because of COVID-19 uncertainty.
It could not only affect freelancers and contractors who provide specialist skills to businesses, but also self-employed tradespeople – many of whom have received little to no financial support from the government either.
Time for government to do the “right thing”
Research conducted by Rhino Trade Insurance prior to the third lockdown being imposed revealed that nearly a quarter (24%) of self-employed tradespeople were not confident their business could survive. Reflecting on this, Managing Director Troy Stevens said: “Another lockdown is the last thing tradespeople want, particularly those who work for themselves – after all, when you’re self-employed, if you aren’t working, you aren’t earning.”
Seb Maley, CEO at Qdos, also commented on the new measures: “This lockdown could force millions of small businesses to close for good if the government doesn’t step in and provide the support they desperately need. Come March, millions will have spent an entire year battling the pandemic without any financial help.
“These sole traders and directors of limited companies have been deliberately ignored, despite the Chancellor promising that nobody would be left behind and despite the government having been provided with solutions – the Director’s Income Support Scheme being one.
“After the Prime Minister’s announcement, it’s time the government did the right thing and rolled out tailored support for freelancers, contractors and small business owners who still, even now – after nearly a year – are being tragically overlooked.”