Sunak unveils new financial support for businesses facing tighter restrictions

By James McAllister

- Last updated on GMT

Chancellor Rishi Sunak unveils new financial support for businesses facing Tier 2 Coronavirus restrictions

Related tags Chancellor Coronavirus Restaurant lockdown Government

Chancellor Rishi Sunak has set out a series of financial measures that seeks to help businesses operating under tighter restrictions, including a cash grant scheme targeted at the hospitality sector.

Speaking in the House of Commons earlier today (22 October), the Chancellor said he would also be increasing support through the existing Job Support Scheme (JSS), in a bid to ensure livelihoods and jobs across the UK continue to be protected in the difficult months to come.

As part of the package, the Chancellor has introduced a scheme where businesses in the hospitality, accommodation and leisure sector that have been adversely impacted by the restrictions in high-alert level areas (Tier 2) will be able to claim a cash grant of up to £2,100 per month.

Equivalent to 70% of the grants available for businesses forced to close in Tier 3, the grants will be retrospective, meaning businesses in areas that have been subject to enhanced restrictions for longer can backdate claims to August. 

Local Authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, such as those businesses in the hospitality supply chain.

In order to support jobs in Tier 2 areas, the necessary hours employees need to work to qualify for the JSS will be reduced from 33% of normal hours to 20%, and the employer contribution for the hours not worked – originally set at 33% - will be reduced to 5%. 

The Government will provide up to 61.67% of wages for hours not worked, up to £1541.75 per month.

Sunak said the scheme will apply to eligible businesses in all alert levels, regardless of whether they are subject to enforced closure. 

Finally, self-employed income support will be doubled from 20% to 40% of people’s incomes, increasing the maximum grant to £3,750.

Having spoken to hospitality operators earlier in the day, Sunak said: “Their message is clear, the impact is worse than they hoped.” 

He was told of a ‘significant fall in consumer demand, causing profound economic harm to their industry’. 

Sunak added that it was clear they and other open, but struggling businesses require further support. 

“This is a more generous version of a short-term work scheme than anywhere else in the world, which is better for business, better for jobs, and better for the economy,” the Chancellor said:

“This is our plan, a plan to support for the British people.”

Responding to the Chancellor’s announcement, UKHospitality chief executive Kate Nicholls said it was a ‘huge and very welcome intervention’ and would ‘save hundreds of thousands of jobs’ in hospitality and supply chain.

“This is a hugely generous package of support and very welcome news just when we needed it," she said.

“The changes to the JSS will help to safeguard hundreds of thousands of jobs and the grant support will provide a crucial lifeline for businesses struggling with low footfall and ongoing costs. It is excellent that the grant has been backdated to when the restrictions began to bite.

“This gives businesses a much-enhanced chance of being able to overcome the challenges and survive into 2021, so they can begin to recover next year and play a vital role in helping boost the economy. It is encouraging to see the Government listening to and understanding the plight of hospitality, which is dire. We are pleased to see that the measures extend to hotels and B&Bs, too.

“It is important now that grants are processed as quickly as possible as businesses are on the brink after weeks of curfew and severe restrictions.

“There is still a long way to go and we will be in close contact with the Government to make sure that our members, and the whole of hospitality, gets the support it needs and deserves. This is a significant step forward for us, though, and a hugely valuable lifeline for businesses to stay afloat and keep as many staff as possible in their jobs.”

According to real estate adviser Altus Group, 89 council areas across England are now classified as being 'high' risk (Tier 2), with a further 34 classed as 'very high' (Tier 3) under the new Coronavirus alert system.

Altus analysis of Government data suggests Tier 2 measures, which bars households from mixing in any indoor setting, are adversely affecting the trade of some 12,422 restaurants in England, as well as 11,798 pubs.

Jonathan Downey, who founded the Hospitality Union group to deal with the massive disruption to the industry caused by the Coronavirus pandemic and last week liquidated the company that ran his four street food businesses​ saying it would be impossible to operate while restrictions are in place, says the Chancellor’s latest intervention is ‘too little too late’.

“This is [Sunak’s] third attempt at next measures and another flop I think,” he says.

“Some SMEs will benefit from the grants and the improved JSS, but I’m really struggling to find anything that will make a significant difference to enough businesses to save hundreds of thousands of jobs.”

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