Latest lockdown announcements – industry reaction

5th January 2021

The government has announced that there will be a new national lockdown. The new restrictions which aim to curb the spread of Covid-19 have come into force in England and Scotland as national lockdowns similar to those introduced last March begin.

As a result of the lockdown, businesses in retail, hospitality and leisure will receive new grants to help them keep afloat until spring, Chancellor Rishi Sunak has said. Separately, £594 million will be made available to affected firms outside these sectors.

The Money Advice Trust, the charity that runs Business Debtline, has welcomed the Chancellor’s new lockdown grants for businesses in the retail, hospitality and leisure sectors, but called on the Government to go further by providing help for the millions of self-employed people so far excluded from existing support schemes.

Findings from a recent report from the charity into the impact of Covid-19 on self-employed people showed that:

  • 37% of self-employed people surveyed expect it to take more than a year for their income to recover – while one in 10 do not expect it to at all.
  • More than half (55%) said Covid financial worries had a negative impact on their mental health, with four in ten (43%) regularly losing sleep.
  • Many who were ineligible for the Self-employment Income Support Scheme or other support are struggling to get by on Universal Credit alone. Almost half (47%) of self-employed people surveyed who were on Universal Credit were behind on at least one household bill or credit commitment.

Joanna Elson CBE, Chief Executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said “Today’s announcement of top-up grants for retail, hospitality and leisure businesses will provide some welcome short-term relief to many business owners affected by the latest lockdown. Covid-19, however, has dealt a huge and devastating blow to the finances of many self-employed people. While Government schemes have helped, today’s announcement will provide little comfort for those people who remain excluded from support.”

“A dedicated grant fund for those excluded from existing support schemes is needed now more than ever, along with an extension to the £20 a week uplift in Universal Credit to provide certainty for those people most in need.  This should form part of a Covid-19 Self-employment Recovery Strategy to provide a route out of this situation.

Commenting on further lockdown restrictions in England, Federation of Small Businesses (FSB) National Chair Mike Cherry said “While there is an overarching need to protect public health and bring coronavirus under control, this is disheartening news for small businesses and a blow to an economy that’s already on its knees. Restrictions have been a harsh reality for almost a year and this is anything but a fresh start to 2021.”

“Today’s news of a new tougher lockdown will cause widespread business failure and job loss unless support is provided on an equal scale to these unprecedented curbs on economic freedom.”

“Current business support is plainly insufficient – There must now be a step change in support to equal the compensation offered during the first lockdown. The level of government grants is off the mark by an order of magnitude and has not kept the pace with events.”

“We now need a new hand-up from Government to help us get through what is fast becoming an enforced closure of much of the whole economy. Schemes such as the business rates 100% relief expire within weeks to be replaced by the next year’s bills landing on the doorsteps of shuttered businesses.”

“FSB wrote to the Chancellor just before Christmas with a five-point plan to save the small business community and help it get through the toughest Quarter One of any year that they have ever faced, providing a bridge to a vaccine-enabled recovery from Easter.  This includes a full second round of £10,000/£25,000 Small Business Cash Grants, a German-style Revenue Loss Scheme, a Directors Income Support Scheme and help for the more recently self-employed at the same time as the SEISS Grant, and extended repayment and limits for bounce-back loans.”

“It must not be forgotten that all this comes at a time where 69% of small businesses are now in debt, with 40% saying the level of debt is “unmanageable”.  Many are trying to navigate the UK’s new trading relationship with the EU, which to avoid tariffs adds further bureaucracy and cost pressures. This is why support should be given to small businesses through £3,000 transition vouchers for tech, training or expertise.

“Small businesses are the lifeblood of communities and the economy, accounting for 60 per cent of private sector employment in the UK. The future economic recovery depends heavily on their survival in this first quarter of 2021.”

Roger Barker, Director of Policy at the Institute of Directors, said: “The resurgence in the virus is aggravating the pain for businesses.For companies in sectors like tourism and hospitality, the vaccine-led recovery still seems a long way off. Even for organisations that can operate  remotely, the closure of schools and colleges could cause significant staffing headaches.”

“The Treasury must now bolster support for the worst affected sectors. In particular, it should seek to reinforce the discretionary grant scheme allocated through local authorities, which has helped to reach those who have fallen through the gaps.

“It will also be crucial to smooth the cliff-edge in support that’s fast approaching in the Spring. Many companies will have next to no chance to build up steam before the end of the first quarter, when support measures are set to wind down. Indications on future policy support and stimulus plans will be crucial for directors to factor into their plans now.”

British Chamber of Commerce Director General Adam Marshall said: Businesses will understand why the Prime Minister has felt compelled to act on the spiralling threat to public health, but they will be baffled and disappointed by the fact that he did not announce additional support for affected businesses alongside these new restrictions.’

The lockdowns announced in England and Scotland today are a body blow to our business communitieshard on the heels of lost trade during the festive season and uncertainty linked to the end of the Brexit transition period. Tens of thousands of firms are already in a precarious position, and now face a period of further hardship and difficulty.’

Billions have already been spent helping good firms to survive this unprecedented crisis and to save jobs. These businesses must not be allowed to fail nowwhen the vaccine rollout provides light at the end of this long tunnel. The financial support for businesses needs to be stepped up in line with the devastating restrictions being placed on them. Otherwise, many of these firms may simply not be there to power our recovery when we emerge once again.”

Enhanced support for businesses, a turbo-charged vaccine rollout, and delivery of existing promises on mass testing must be delivered to enable the UK to restart, rebuild and renew.”