Business leaders from across the North West have raised fears that the new measures introduced by Rishi Sunak to help firms through the third English lockdown “just won’t be enough”.
On Tuesday morning, the Chancellor announced the new package which included one-off top up grants for retail, hospitality and leisure businesses worth £9,000 per property. That was in addition to further grants for local authorities worth up to £3,000 a month for firms, and a £594m discretionary fund.
But while the move has been welcomed by some business leaders, others fear it won’t go far enough – pointing out there are still gaps in support, and that firms need help to pivot and shift their business models too.
Others say the furlough scheme should now be extended in the wake of the new national lockdown – with a National Insurance and Pension contribution holiday for those sectors hardest hit.
Here’s what they told BusinessLive:
Yvette Hastings, Federation of Small Businesses (FSB) area leader for Cheshire, said while the additional financial support will be a “lifeline” to 600,000 businesses and therefore is welcome, a plan is needed “that matches the scale of the economic damage we are seeing”.
She said: “For many businesses already under the cosh and on the brink, it just won’t be enough. These funds come after a disappointing festive period and with the imposition of a last-minute lockdown – they do not go far enough to address the crisis that small firms are facing.
“There remain too many groups who need more support to weather this storm such as the newly self-employed, those in supply chains and company directors. We continue to call on the government to create a Directors Income Support Scheme, mirroring the Self-Employed Support Scheme, in the form of a taxable grant for directors of limited companies calculated at 80% of three months average monthly trading profits, paid out in a single instalment and capped at £7,500.
“We also need to see the government make clear its plans for more finance capabilities made available to those who have used their allocations through Bounce Bank Loans as well as extending the period before repayments begin.
“This lockdown is expected to last for some time, even when restrictions ease, many small firms will be unable to function fully, if at all. The government should create a Spring Economy Plan to help firms get through to drive a vaccine-enabled recovery.
“After clawing their way through 2020, the start of the new year looks set to be an even worse one for many small businesses, which are the backbone of our economy. It is vital that we support them in every way possible until the crisis finally begins to ease.”
Dr Gordon Fletcher
Dr Gordon Fletcher, retail expert from the University of Salford Business School, says longer term support is required.
Dr Fletcher said: “The maths is not great for this new offer of support from the Chancellor.
“The majority of the £4.6bn in support goes to the retail, hospitality and leisure sector across the country as an offer of up to £9,000 for each property. With the restriction due to last for at least six weeks that works out at £1,500 per week. Enough to cover the most immediate basics.
“After 10 months of restrictions there is a real need to not just keep the lights on but to actively support businesses in these sectors to thoroughly ‘pivot’ and shift their business models.
“These sectors can become more robust to social-distancing and lockdowns restrictions but although the impetus to innovate may be present there is also a need for investment to support this change.”
Paul Cherpeau, chief executive of Liverpool Chamber of Commerce also raised concerns for those “falling through the funding gap”.
He said: “Whilst this is not the New Year start we all wanted, it is vital now to follow Government guidelines and for all businesses to advise staff to work from home where possible.
“We are also pleased to see this morning’s announcement from the Chancellor for top up grants for retail, hospitality and leisure as well as discretionary funds for other impacted businesses.
“We still though continue to champion Liverpool business to local and national government and push for ongoing and sustained financial support for all businesses including those falling through the funding gap as well as supply chains and freelancers.
“We continue to urge all businesses to make use of the mass testing programme in Liverpool and are here for all members and businesses to offer help and guidance over the next few months.”
Frank McKenna, chief executive of business lobby group Downtown in Business, said “all the evidence” shows that the Chancellor’s actions “are not helping prop up the UK economy – and that Government support for business is not working”.
He said: “Unemployment is dramatically increasing and will rise even further as soon as furlough payments cease. As Begbies Traynor, the insolvency experts, have shown, there is a major increase in companies that are significantly distressed.
“With people forced to work from home and schools now closed productivity is going to be on the floor. All indicators are that Rishi Sunak’s interventions are not enough to keep the economy on track.”
Mr McKenna continued: “Today’s announcement does not go far enough. Whilst he has announced some money for those forced to close completely, there is little for all other businesses.
“The self-employed and directors are still not receiving adequate support. For larger firms, furlough only pays 80% of wages, so the other 20% has to be found, one still has National Insurance and Pension contributions to find, there is rent to pay and the Coronavirus Business Interruption Loan (CBIL) repayments are coming down the line.
“This is why we’re seeing mass redundancies and companies in significant distress.”
Offering solutions, he added: “Rishi Sunak must now announce a National Insurance and Pension contribution holiday for those sectors hardest hit.
“He also needs to instruct banks to introduce an ‘interest moratorium’ and he should initiate discussions with commercial landlords to explore the possibility of extending leases and adding any outstanding rent to repayments across the duration of the lease – again with the support of the banks where necessary. These unparalleled times call for unprecedented action from the Treasury.”
The Metro Mayors
Following the announcement, Greater Manchester mayor Andy Burnham and Liverpool City Region metro mayor Steve Rotheram both took to Twitter to express their dismay at the 3m ‘ExcludedUK’ group who were once again left out of the Chancellor’s support package.
Rain Newton-Smith, CBI’s chief economist, credited the Chancellor with “moving swiftly” to support businesses as circumstances change – and that it was “sorely needed”.
She said: “More direct grants will provide some relief to eligible companies’ cashflow.
“Yet with businesses facing a third lockdown, there are other steps that can help provide a bridge to the all-important economic recovery, particularly those affected through supply chains.
“For some, demand has once again evaporated overnight, and in northern England some firms have been labouring under stop-start orders for months already.
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“Therefore extending the job retention scheme to end of the second quarter would provide firms with a clear line of sight, aiding planning and investment.
“And removing the business rate relief cliff edge in April will provide much-needed breathing space, as will re-examining the case for VAT deferrals.
“With the vaccine rollout now underway, and increasing mass rapid testing, there really is a brighter future within reach. Maintaining steadfast support for firms during this painful period will help ensure the recovery is delayed for as short a time as possible.”