When the first wave of Covid-19 struck the UK in March, many businesses feared the worst as they closed their doors.
With the help of a number of UK Government schemes, however, most firms avoided the worst of what could have happened. The suite of measures, ranging from emergency loan support to the heralded furlough scheme, has been described by the global economic powerhouse IMF as one of the most generous in the world.
As we enter the second phase of the UK’s fight against Covid-19, many of those UK Government schemes have been continued and extended to ensure that businesses are again able to ride out a storm that is not of their own making. That includes the Coronavirus Job Retention Scheme – known widely as the furlough scheme – as well as a host of other support.
How does the extended furlough scheme work?
With a spike in cases and restrictions on business’ operations, the Chancellor announced on November 5 that the scheme will be extended until the end of March.
Employees placed on furlough will receive 80 per cent of their usual salary for hours not worked, up to the same maximum as the first iteration of the scheme – £2,500.
Crucially, businesses will have flexibility from the off to use the scheme for employees for any amount of time, including furloughing them all time. Employees won’t need to have been previously furloughed, and anybody on payroll on October 30 – who has been paid at least once by PAYE in the six months beforehand – can be placed on the scheme. This includes individuals who were made redundant between September 23 and October 30.
And there will be no employer contribution to wages for hours not worked. Employers will only be asked to cover NI and pension contributions for hours not worked, which on averages cost around £70 per month.
How does it work in practice?
Ross Evans, a third-generation publican, used the furlough scheme when pubs were shut the first time – and is using it again this month.
His pub The Ship Tavern in Holborn has become well known as one of central London’s best pubs, with an oak-panelled ground floor and a stunning restaurant upstairs. Included just last year in the book “Great Pubs of London,” the pub is a traditional inn with a modern touch.
“In March, we moved people onto furlough and it helped us keep staff through that tough period.
“During the summer and into the winter we adapted everything we did to ensure that we could keep serving our customers and keep the pub thriving and busy. We’ve invested in heaters for outside as well as tables and chairs, and in the hot weather we even tried out takeaway margaritas!
“Lockdown 2 could have been a really tough blow but being able to put people back on to furlough means that, fingers crossed, we’ll be able to bring everybody back for a bumper December.
“There’s been a pub on this site since 1549 – it’s survived plagues, fires and the Blitz, and 2020 won’t be the end of it on my watch.”
What else is available for businesses?
The UK Government has also announced that it will extend the application deadline for loan schemes until the end of January 2021.
Those schemes include the Bounce Back Loan Scheme, the Coronavirus Business Interruption Loan Scheme, the Future Fund and the Coronavirus Large Business Interruption Loan Scheme.
Businesses that took out Bounce Back Loans, too, will be able to “top up” their loan if they took out less than the maximum – £50,000, or 25 per cent of their turnover. Many of us expected the disruption to be over by now, so the UK Government is keen to give people a second chance to secure the funds they need to tide them over.
And earlier this year, the UK Government announced that the payment terms on those loans can be extended from six to ten years – allowing businesses to pay back their loans as they grow, in a far better trading environment than the one 2020 has offered.
What about businesses forced to close before “Lockdown 2”?
All businesses forced to close due to national or local restrictions will receive up to £3,000 a month – helping to pay the rent whilst the doors are shut.
Local authorities have also received a one-off funding package of more than £1 bn to support businesses in their communities affected by restrictions.
And for those businesses that were shut or saw significantly reduced revenues before the second ‘national lockdown’ due to being in Tier 2 or Tier 3 areas, the UK Government will give a back-dated grant from the date restrictions came into place equivalent to 70 per cent of the value of the full ‘closed grant’ – up to a maximum of £2,100 a month.
Many of those ‘footfall businesses’ will already have benefitted from reduced VAT until March 2021 and the deferral of business rates until the same time.
Is there any help for the self-employed?
Yes, through the Self Employment Income Support Scheme. Essentially, the scheme offers a grant to all eligible self-employed individuals equivalent to 80 per cent of their usual trading profits – the same level as the support available through the Coronavirus Job Retention Scheme.
The window for claiming a grant will open on November 30, two weeks earlier than planned. The UK Government will set out details for the fourth self-employed grant in the New Year.
Are other schemes available for the regions and nations?
All of the schemes initiated by the UK Government are available around the whole country, including in Northern Ireland, Wales and Scotland. Each nation has been given what the UK Government calls an “upfront certainty” by promising to fund those schemes outside of the usual funding mechanisms.
In Scotland, more than £2 bn worth of Bounce Back Loans have been paid out, and more than 100,000 people are benefiting from the Self Employment Income Support Scheme. Welsh and Northern Irish businesses are also taking up the schemes in their numbers, helping firms right across the country get through this tough year.
Where can I find all the information?
Entrepreneurs and business leaders are natural optimists – and there’s plenty of reason to be. Early indications suggest that 2021 will see serious economic growth as the country gets on its feet again – and those businesses using the suite of options available to them should be able to enjoy the rewards next year.