Yahoo Finance Businesses fear Covid lockdown catastrophe as Rishi Sunak aid package fails to go far enough
Businesses across London forced into closure by the new lockdown declared Chancellor Rishi Sunak had not gone far enough in his aid package this
morning as he failed to offer them the tax reliefs they need to survive beyond the spring.
Having first been left furious that Prime Minister Boris Johnson did not announce any support for employers in last night’s lockdown announcement, today some privately said they were facing ruin after Sunak offered too little, too late.
The Treasury said it would extend local authorities’ discretionary grants and give businesses aid of up to £9000-per-property.
But it did not extend the reduced VAT or business rates relief for the retail, hospitality and leisure sectors as they had called for. These come to an end on March 31.
There will be one-off top-ups of £4000 for closed businesses with a rateable value up to £15,000, £6000 for those rated at £15,000-£51,000 and £9000 for those with rateable values over £51,000.
Rob Pitcher, head of Revolution Bars, welcomed the grants, which for the first time included those valued in the higher bracket, but said it was “just a fraction” of the cost of being fully closed by the government.
The British Chambers of Commerce director general Adam Marshall demanded more long-term thinking.
“The government must move away from this drip-feed approach and set out a long-term plan that allows businesses of all shapes and sizes to plan and ultimately survive.” He said more help was needed for those in the supply chain of the “front line” of retail and hospitality.
Smaller companies said the measures did not go far enough. “We have to have an extension to tax reliefs,” said Mark Derry, chairman of Brasserie Bar Co.
The London Chamber of Commerce said: “The government need to demonstrate they understand that this remains a marathon; it’s not yet the final sprint.
“We need to see the Chancellor is looking beyond spring. Extension of the VAT and business rate relief periods would show government understands our economy will not fully recover until vaccination roll-out is complete and London’s tourism and global economy recovers. That will be beyond Spring, realistically.”
Colin Waggett, boss of the Third Space gym group in London said: “The grants represent a very small proportion of the costs of being closed with zero revenue for a business like ours. We need to see the rates holiday extended by another year, and reduced VAT when we reopen so that previously successful businesses like ours can rebuild more quickly, enabling us to repay the debts we’ve racked up whilst closed.”
Frank Maguire, head of marketing at Truman’s Beer, which operates sites in east and north-east London, said: “It’s clear that the Government need to provide a lot more financial support to hospitality to help with fixed costs, and importantly this needs to extend to the supply chain which has basically seen £0 in support with the exception of furlough.”
He said that after reliefs end, April “is going to be the real litmus test” for London hospitality.
Kate Nicholls, chief executive of trade group UKHospitality, warned the new measures are “only a sticking plaster” for immediate issues, and called on the Chancellor to announce a longer-term economic plan.
“This is obviously a very positive step to keep businesses afloat in the immediate term and, for that reason, must be welcomed,” Nicholls said.
“However, while this announcement is most welcome, make no mistake that this is only a sticking plaster for immediate ills – it is not enough to even cover the costs of many businesses and certainly will not underpin longer-term business viability for our sector.
“To address the inevitable and existential challenges that hospitality faces, we need confirmation of extensions to the business rates holiday and of the 5% VAT rate.
“On its own, today’s support is not enough.”
Andrew Goodacre, boss of the British Independent Retailers Association, said: "We welcome the extra money being provided to closed businesses, on top of the existing grants. The problem is that we have no end date when this lockdown will end and our fear is that this will not be enough to help businesses survive and protect those all important jobs. The government need to keep an open mind and be prepared to offer more support if this lockdown looks like being longer than they envisage at the moment. We would also like to see the interest free period for loans extended and the issue of longer-term business rates relief addressed so that businesses can plan ahead."
The Mayor of London, Sadiq Khan, said: “I welcome this announcement of much-needed additional support, which business groups and I have been calling for. It should have come sooner and it won’t replace the revenue lost over the vital Christmas period, but it should help many struggling retail, hospitality and leisure businesses stay afloat until spring.
“Clearly more help is needed – including an extension to the business rates holiday and the VAT relief scheme, targeted support for night-time economy businesses which have been forced to stay shut since March, and more support for those who are self-isolating.
“I’m also urging the Chancellor to act swiftly and guarantee the furlough scheme will continue to protect people’s jobs until the vaccine is rolled out widely and restrictions are lifted.
“It’s scandalous that there are three million excluded self-employed people who continue to be ignored, many of whom are left facing the impact of these tougher restrictions alone.”
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