Chancellor’s Statement - 17 March 2020

Chancellor’s Statement - 17 March 2020

Chancellor’s Statement - 17 March 2020

17 March 2020

Chancellor’s Statement

Please note: While the Chancellor has taken extraordinary steps to build on the already considerable business support package announced last week, some of the measures will only directly affect English businesses. Matters which are devolved, such as Non-Domestic Rates, will not include Scotland. We continue to be in regular contact with the Scottish and UK Governments, as well as other industry bodies. We will provide updates to members at first available opportunity.

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The Chancellor, Rishi Sunak, has announced an economic emergency and promises to do whatever it takes to support economy. He recognizes that this crisis will not be overcome by a single package of measures and will require a collective national effort.

The Chancellor announced a 30 billion package of support as part of the budget and is now announcing further action.

First, Making available an initial £330 billion of guarantees, equivalent of 15% of our GDP that means any business who needs access to cash to pay their rent, salaries, suppliers or purchase stock will be able to access a Government backed loan or credit on attractive terms. If demand is greater that the initial £330 billion then the Government will go further and will provide as much capacity as is required.

That support will be delivered through two main schemes:

  • To support liquidity amongst larger firms the Chancellor has agreed a new lending facility with the Governor of the Bank of England to provide low cost, easily accessible commercial paper.
  • To support small and medium sized businesses the Chancellor is extending the new Business Interruption Loan Scheme he announced at the budget so that rather of loans of £1.2 million, it will now provide loans of up to £5 million with no interest due for the first six months.

Both of these schemes will be up and running at the start of next week.

The Chancellor is also taking a new legal power in the new Covid Bill to offer whatever further financial support he decides is necessary.

Some sectors are facing particularly acute challenges. In the coming days the Chancellor and the Secretary for Transport will decide a potential support package specifically for airlines and airports. Yesterday he asked his Cabinet colleagues to urgently convene meetings over the coming days with business leaders and representatives in the most affected sectors to identify other specific opportunities to support them and their industries including possibly regulatory forbearance.

Second, as well as access to finance, businesses need support with their cashflow and fixed costs. Following the change in medical advice there is concern on the impact of pubs, clubs, theatres and other hospitality, retail and leisure venues. The Chancellor confirms for those that do have a policy insurance that covers pandemic that the Government’s action is sufficient and will allow businesses to make an insurance claim against their policy.

However, he recognizes that many businesses do not have insurance and for those he will need to do more.

During the budget the Chancellor announced that businesses in the retail, hospitality and leisure industry with a ratable value (RV) of less that £51,000 will pay no business rates this year. He now goes further and provides the businesses in those sectors with an additional cash grant of up to £25,000 per business. He also announced extending the business rates holiday to all businesses in the retail, hospitality and leisure sector, regardless of their RV.  That means every business in the retail, hospitality and leisure sector will pay no business rates for 12 months.

Last week also the Chancellor announced that he would be providing £3,000 cash grants to the 700,000 of our smallest businesses. Considering the new circumstances and to support their cashflow, this is now being increased to £10,000.

Taken together, on top of the unlimited lending capacity already announced This is a package of direct support to businesses, through tax cuts and grants, in this financial year,  worth more than £20 billion and that comes on top of the existing multi-billion pound package which was set out at budget, which included reimbursing small and medium sized companies for the cost of statutory sick pay.

Local authorities will be fully compensated for the cost of these measures and the devolved administrations will receive at least £3.5 billion in additional funding as a result of these measures to provide support for businesses.

Third, the Chancellor will strengthen support for peoples and individuals. At budget he committed £1 billion to support the financial security of vulnerable people through a ½ billion boost welfare system and a ½ billion hardship fund for Local Authorities.

Also announced that for those that are in difficulties due to coronavirus, mortgage lenders will now offer a three-month mortgage holiday so that people will not have to pay their mortgage costs whilst they get back on their feet.

In the coming days the Chancellor will go much further to support people’s financial security in particular he will work with trade unions and business groups to urgently develop new forms of employment support to help protect people’s jobs and their incomes through this period.

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