The chancellor of the exchequer has announced £7 billion of extraordinary measures to help support businesses and individuals who will be affected by the covid-19 coronavirus outbreak in his first Budget today.
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The cost of statutory sick pay (SSP) for coronavirus-related absence will be covered for businesses with fewer than 250 employees, providing over £2 billion for up to two million businesses. Rishi Sunak said: “The best way to support people is to protect their jobs – and we do that by supporting our businesses.”
Addressing measures relating to coronavirus before moving on to his main Budget address, Sunak confirmed, as reported in Personnel Today last week, that SSP will be available “to all those advised to self-isolate even if they haven’t yet presented with symptoms”, adding that people would soon be able to obtain a sick note by contacting 111 rather than having to go to the doctors.
“The measures I have announced today on statutory sick pay are crucial to support those who need to take time of work, but that cost will be borne by business. And if we expect 20% of the workforce to be unable to work at any one time, the cumulative cost would hit our small and medium size businesses hard.
“In recognition of these exceptional circumstances, today I am taking a significant step. For businesses with fewer than 250 employees I have decided that the cost of providing statutory sick pay to any employee of work due to coronavirus will for up to 14 days be refunded by the government in full.”
He acknowledged that not everyone is eligible for SSP, for example the self-employed or people earning below the lower earnings limit of £118 per week.
“There are millions of people working hard who are self-employed or in the gig economy. They will need our help too,” said Sunak.
The chancellor said the government will make it quicker and easier for them to access benefits. Those on contributory employment and support allowance (ESA) will be able to claim from day one instead of day eight. The government is also temporarily removing the minimum income floor in universal credit and relaxing the requirement for anyone to physically attend a jobcentre – “everything can be done by phone or online” said Sunak.
Rishi Sunak also said he was creating a £500 million fund for local authorities to help them support vulnerable people in their area. And he said HM Revenue & Customs will “scale up” the Time To Pay service, which enables tax owed to be paid in installments, allowing businesses and the self-employed to defer tax payments over an agreed period of time. A dedicated helpline with 2,000 staff is launched today.
The chancellor added: “Now although Time to Pay is important, it will still be the case that some good well-run business will face problems with their cash flow. They will struggle to pay people salaries, pay their bills or buy new stock. They will need loans to get through this period.”
He then announced a new temporary “Coronavirus Business Interruption Loan Scheme”. Banks will offer loans of up to £1.2 million to support SMEs. The government will offer a generous guarantee on those loans covering up to 80% of losses with no fees so that banks “can lend with confidence”.
Further measures to help protect businesses included:
- Abolishing business rates for shops, cinemas, restaurants and music venues with a rateable value of less than £51,000
- Extending this 100% retail discount to others in the leisure and hospitality sector: museums, art galleries and theatres, caravan parks and gyms, small hotels and B&Bs, sports clubs, nightclubs, clubhouses and guest houses.
- For small businesses currently eligible for the small business rate relief, there will be a £3,000 cash grant per business, representing a £2 billion cash injection to 700,000 small businesses.
Tom Hadley, director of policy at the Recruitment and Employment Confederation said: “Today’s Budget gives a much-needed boost to businesses that are facing unprecedented pressure over Coronavirus. Measures aimed at small and medium businesses like 100% relief on business rates and refunding the statutory sick pay bill for up to 14 days will help businesses address cash flow problems they are likely to encounter in the coming months.
“However, there appears to be little support for business of over 250 employees – this is likely to include temporary workers on the books of recruitment agencies.”
Glenn Hayes, employment partner at Irwin Mitchell, said: “If predictions are correct, up to a fifth of the workforce may be affected – that’s a huge cost for businesses, many of whom may also have to engage agency or bank staff to cover staff absence which will also add to their costs. Those businesses that rely on foot fall may already have seen a drop in demand and will be less able to cope with large sick pay costs.
“There was some suggestion that the government might temporarily increase the amount of SSP to encourage more people to stay at home if they have minor symptoms or are asked to self-isolate because, for many, being paid £94.25 per week, is a drop in the ocean compared to their actual lost income. There’s nothing in the budget about this. Some employers are paying staff full pay, but this may not be sustainable in the long run, if significant numbers of people are affected.”
The rate of statutory sick pay is proposed to increase from £94.25 to £95.85 on 6 April.