Targeted help for employers and employees welcome - but will it be enough?

12.10.2020
James Shipp
COVID-19, News

Rishi Sunak’s announcement of targeted support for businesses forced to close because of Covid-19 are welcome, but there are many unanswered questions, says James Shipp of Lovewell Blake.

Friday’s announcement of targeted help for employers and employees in businesses which are forced to shut because of localised coronavirus restrictions is to be welcomed.  But there remain many questions about how it will work in practice, and whether it will be successful in protecting jobs in sectors which have taken the hardest hammering during the pandemic.

Mr Sunak announced that the Government will pay two-thirds of the wages of employees in businesses which are forced to close.  Importantly, small employers will not be asked to make any contribution, which is vital given that they will not be trading in such circumstances (larger employers will have to pay national insurance contributions amounting to only around five per cent of wages).

Equally helpful is the £3,000 per month business grant, which will at least help smaller businesses keep up with the rent, which in most cases is the single bill which can’t be deferred (unlike VAT, business rates and corporation tax).

Sectors such as hospitality have been asking for targeted support for some time, and the worsening situation seems finally to have persuaded the Chancellor to listen.

There are some significant uncertainties about the scheme, though.  Will it apply to those sectors which were never allowed to re-open, such a night clubs?  Or will it only apply to businesses forced to close their doors in specific local areas?

And what about supply chains?  Clearly a restaurant which is told to shut its doors will be eligible for the scheme; but for every such business, there are half a dozen others which are entirely dependent on the sector – are these businesses to be left to their own devices?  The potential for job losses in this secondary tier could be greater than the number saved by the Chancellor’s largesse.

Nevertheless, given that more stringent restrictions in those areas with high infection levels seem inevitable (and although East Anglia is doing relatively well, there are some hotspots such as Great Yarmouth which could fall into this category), targeted help such as that announced on Friday was the obvious route to take – and employers in affected sectors will be breathing a sigh of relief.

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