The government announced a £350bn package of financial measures yesterday (17 March) to protect employers from the impact of the coronavirus.
The package was broken up into £330bn in loans to businesses and £20bn in other aid. Chancellor Rishi Sunak also announced a business rates holiday and grants to support retailers and pubs.
Sunak said the government would do “whatever it takes” to support the UK economy: “We will support jobs, we will support incomes, we will support businesses, and we will help you protect your loved ones,” he said.
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“Today, I am making available an initial £330 billion of guarantees – equivalent to 15% of our GDP.
“That means any business who needs access to cash to pay their rent, the salaries, suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms.”
However, CBI director-general Dame Carolyn Fairbairn said that “urgent decisions” were needed on wages.
“An immediate mechanism is needed to top up wages for firms with no choice but to reduce hours for lower paid staff, so they can keep them employed and get through to the other side.
“It is clear this situation will not stand still, so nor can the economic support. The pace of change is too fast to play catch up.”
Sunak announced that lenders would offer a three-month mortgage holiday for those facing financial difficulty, although this would need to be paid back at some stage.
He added that, in the coming days, he would work with trade unions and business groups “to urgently develop new forms of employment support to help protect people’s jobs and incomes through this period”.
For small businesses, the government said it would increase its offer of a £3,000 cash grant to £10,000 to support cash flow. In last week’s Budget, he indicated that companies with 250 employees or fewer would be reimbursed for the cost of statutory sick pay.
There has been no indication so far as to whether the government would postpone the scheduled increases to the national minimum wage and national living wage due in April, however.
“An immediate mechanism is needed to top up wages for firms with no choice but to reduce hours for lower paid staff, so they can keep them employed and get through to the other side.” – Dame Carolyn Fairbairn, CBI
The government is also yet to announce protections for the self-employed. IPSE, the Association of Independent Professionals and the Self-Employed has set up a petition for the government to create a Temporary Income Protection Fund for freelance or ‘gig’ workers who either need to self-isolate due to the virus or lose contracts due to business disruption.
Chief executive of the British Retail Consortium Helen Dickinson said the measures were “a vital shot in the arm” but that the sector needed to see more details as to how employers would access the cash.
Paul Johnson, director of the Institute of Fiscal Studies, said this “substantial level of support” was welcome but warned that “it will remain as expensive to pay people and if demand is down then jobs are likely to go”.
Yesterday the government’s chief scientific officer confirmed that 71 people are now known to have died from the virus, and an estimated 55,000 people now have Covid-19.