Yesterday the Chancellor of the Exchequer, Rishi Sunak, announced further support in terms of the economic response to coronavirus.
The Chancellor has made available an initial £330 billion of guarantees- equivalent to 15% of our GDP.
This means that any businesses who need access to cash to pay their rent, the salaries, suppliers or purchase stock, will be able to access a government-backed loan on attractive terms.
That support will be delivered through two main schemes:
- To support liquidity amongst larger firms, the Chancellor has agreed a new lending facility with the Governor of the Bank of England to provide low cost, easily accessibly commercial paper
- To support lending to small and medium sized businesses, the Chancellor is extending the new Business Interruption Loan Scheme which he announced at the Budget last week. So rather than loans of £1.2 million, it will now provide loans of up to £5million, with no interest due for the first six months.
The Chancellor also said that if demand is greater than the initial £330 billion he is making available then he will go further and provide as much capacity as required.
The Chancellor is taking a new legal power in the Covid Bill to offer whatever further financial support he decides is necessary.
The Chancellor has also identified that alongside access to finances, businesses need support with their cashflow and fixed costs.
Due to the changed medical advice on the 16th March, there are concerns about the impact on pubs, clubs, theatres and other hospitality, leisure and retail venues.
The Chancellor confirmed that for those businesses which do have a policy that covers pandemics, the Government’s action is sufficient and will allow businesses to make an insurance claim against their policy.
The Chancellor is, however, very away that many of those businesses do not have insurance. So has announced further measures.
Last week, the Chancellor announced that for businesses in the retail, hospitality and leisure sectors, with a rateable value of less that £51,000, they will pay no business rates this year. The Chancellor has since gone further and will provide those businesses with an additional cash grant of up to £25,000 per business- to help bridge through this period.
The Chancellor has also extended the business rates holiday to all businesses in those sectors, irrespective of their rateable value. This means that every single shop, pub, theatre, music venue, restaurant- and any other business in the retail, hospitality or leisure sector- will pay no business rates whatsoever for 12 months, and if they have a rateable value of less than £51,000 they can now get a cash grant as well.
The Chancellor has further increased grants being provided to the 700,000 of our smallest businesses. Last week the Chancellor announced that these businesses would get £3,000 in cash grants but in light of the new circumstances, and to support these businesses’ cash flow, the Chancellor has increased these grants to £10,000.
All of this taken together, on top of the unlimited lending capacity the Chancellor has already announced, this is a package of tax cuts and grants, in this financial year, worth more than £20 billion. This is also on top of the existing multi-billion pound package the Chancellor set out at the Budget which included reimbursing small and medium sized companies for the cost of statutory sick pay.
The Chancellor has also announced measures to strengthen support for people and individuals. At the Budget last week, the Chancellor committed £1 billion to support the financial security of vulnerable people, through a half billion boost to the welfare system, and a half billion pound Hardship Fund for Local Authorities.
The Chancellor has, following discussions with the industry today, announced that for those in difficulty due to coronavirus, mortgage lenders will offer at least a three month mortgage holiday.
In the coming days, the Chancellor will be working with trade unions and business groups to urgently develop new forms of employment support to help protect people’s jobs and incomes through this period.
This is first and foremost a public health emergency and the Chancellor reiterated today his commitment that whatever resources the NHS needs, it will get.
Please use the link below to read in full the Chancellor’s speech and all the measures he announced.