Firms face plunging off ‘cliff-edge by SPRING’: Bosses demand VAT and tax relief during 2021 after third lockdown delivers ‘body blow’ for thousands of businesses forced to shut
- Boris Johnson last night plunged the country into another nationwide lockdown
- All non-essential shops, hairdressers and personal care venues must close
- Business bodies warn ‘tens of millions of firms,’ will face ‘hardship and difficulty’
- Treasury called on to extend business rates and VAT relief throughout 2021
Bosses across England have demanded VAT and tax relief be extended throughout 2021 after a third lockdown announcement delivered a ‘body blow’ for thousands of firms – which face a ‘cliff edge’ as support ends in the spring.
The Prime Minister last night plunged the country into a national lockdown even more brutal than last March in a desperate bid to keep the mutant coronavirus strain at bay while vaccines are rolled out.
Many hard-hit small business owners say their shops could be facing ruin under the new lockdown which will continue until at least February half-term. Mr Johnson also failed to announce any financial support measures in his address.
Jasmine Whitbread, chief executive of London First, said: ‘Businesses across the country will be wondering how they are going to survive into the spring. The Government must now extend business rates and VAT relief throughout 2021 and stand ready to pump further direct support to businesses forced to close.’
Adam Marshall, director general of the British Chambers of Commerce, business will be ‘baffled and disappointed,’ by the fact Mr Johnson ‘did not announce additional support for affected businesses alongside these new restrictions’.
He added: ‘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 now, when the vaccine rollout provides light at the end of this long tunnel.’
Furious small business owners say their non-essential stores could go bust under a third national lockdown – with one desperate pub owner revealing he has gone nearly a year with no income (file image)
Prime Minister Boris Johnson last night plunged England into a third national lockdown – prompting outcry amongst business owners in need of support
Adam Marshall, director general of the British Chambers of Commerce, said: ‘Businesses must not be allowed to fail’
TUC general secretary Frances O’Grady said: ‘The Government’s financial support package isn’t good enough to cope with this renewed public health emergency. Without more support, jobs will be lost and businesses will close.
‘Ministers must act quickly by providing targeted help for hard-hit industries, boosting sick pay to a real Living Wage so that people can afford to self-isolate and increasing Universal Credit.
‘And in the wake of school closures, ministers need to help working families by encouraging employers to furlough parents who can’t work because of childcare responsibilities.’
Unison general secretary Dave Prentis said the Government should have acted ‘sooner’ to implement stricter measures.
Supermarkets, pharmacies and petrol stations all feature on the permitted business list – as do the less-obvious dry cleaners and outdoor botanical gardens.
Salon-owner Claire Miller wrote on Twitter: ‘Lockdown again… Sorry but when exactly are they gonna realise it’s not strict enough and these 3 weeks in 2 weeks out isn’t working!?
‘My business is literally gonna end up down the toilet pan if something doesn’t change AND quick. Sick to death of it all. Revolving door!’
Alysha Daniels – owner of salon and spa Infusion Wellbieng in Milton Keynes added: ‘I just want the announcement now like my anxiety cannot be dealing with this. I know it’s going to be a lockdown but how long for I need to know now so I can sort things out for my business.’
TUC general secretary France O’Grady says the Government’s existing support package ‘isn’t good enough,’ for businesses to cope with a third national lockdown
Hairdresser Ella Bulmer (left), based in Redcar, North Yorkshire, said: ‘This lockdown has hit different. the anxiety I’m feeling for the announcement tonight is unreal, closing my business for a third time and having no income is taking a toll.’ Salon-owner Claire Miller (right) wrote on Twitter: ‘Lockdown again… Sorry but when exactly are they gonna realise it’s not strict enough and these 3 weeks in 2 weeks out isn’t working!?’
Alysha Daniels (pictured) – owner of salon and spa Infusion Wellbieng in Milton Keynes added: ‘I just want the announcement now like my anxiety cannot be dealing with this. I know it’s going to be a lockdown but how long for I need to know now so I can sort things out for my business’
How much does the furlough scheme cost?
The Treasury estimates costs of a billion pounds a month for every million workers on the furlough scheme.
The Bank of England has said it expects 5.5million people to be furloughed, suggesting a bill of approximately £5.5billion a month.
The Resolution Foundation think-tank says the monthly cost could be even higher at £6.2billion a month.
Hairdresser Ella Bulmer, based in Redcar, North Yorkshire, said: ‘This lockdown has hit different. the anxiety I’m feeling for the announcement tonight is unreal, closing my business for a third time and having no income is taking a toll.’
Gary Murphy, who runs the Ye Olde Mitre in High Barnet, north London, told MailOnline that the Government support is not enough to keep his business going.
He said: ‘For my business it is £500 a week which isn’t enough. The rent alone is £2,000 a week.
‘How long is it going to be for? If it is a couple of months that will be a year with no income.’
Roger Barker, director of policy at the Institute of Directors, said: ‘The resurgence of 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 nurseries 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.’
Jasmine Whitbread, chief executive of London First, said: ‘Businesses across the country will be wondering how they are going to survive into the spring’
Unison general secretary Dave Prentis says the Government should have implemented tighter measures ‘sooner’
Mr Johnson is urging the nation to stick to the new rules from this evening but business chiefs reacted with anger due to the short notice and because the PM failed to announce any new financial support for firms.
Industry bosses said the latest restrictions represented another ‘body blow’ to struggling businesses.
Stephen Phipson, chief executive of Make UK, said: ‘In the face of a renewed national crisis the Prime Minister is right to take these vital measures.
‘This fight is likely to occupy much of the coming year and, just as it has done since the start of the crisis, industry has supported the national effort and will continue to do so. In return, it is now critical Government revisits the business support packages.’
Emma McClarkin, chief executive of the British Beer & Pub Association, said: ‘Given the circumstances, a wave of business failures is imminent unless a greater package of financial support from the Government is given to secure pubs and the brewers that supply them.
‘That means grants in line with those in the first lockdown and support beyond April when the business rates holiday, lower VAT rates and furlough scheme all end.’
Roger Barker, director of policy at the Institute of Directors warned businesses face a ‘cliff-edge’ when support ends in the spring
Stephen Phipson, chief executive of Make UK has echoed calls for greater business support
Speaking in Number 10, Mr Johnson said tough new coronavirus curbs are necessary in order to crackdown on a new, more infectious strain of the disease which is spreading across the UK.
He said: ‘With most of the country already under extreme measures, it is clear that we need to do more, together, to bring this new variant under control while our vaccines are rolled out.
‘In England, we must therefore go into a national lockdown which is tough enough to contain this variant.
‘That means the Government is once again instructing you to stay at home.
‘You may only leave home for limited reasons permitted in law, such as to shop for essentials, to work if you absolutely cannot work from home, to exercise, to seek medical assistance such as getting a Covid test, or to escape domestic abuse.’
The Government has already announced that its furlough wage support scheme is being extended to the end of April.
But business leaders immediately said the new lockdown will require more support if firms are to stay afloat.
Adam Marshall, the director general of the British Chambers of Commerce, 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 communities, hard 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.
Gary Murphy (left), who runs the Ye Olde Mitre (right) in High Barnet, north London, told MailOnline that the Government support is not enough to keep his business going
‘These businesses must not be allowed to fail now, when the vaccine rollout provides light at the end of this long tunnel.’
Rehana Azam, GMB national secretary, said: ‘After days of dither and delay in the face of our calls, Boris Johnson has finally woken up from his slumber, come to his senses, overruled the Education Secretary and ordered schools to close to all but key workers and vulnerable children.’
Tony Danker, CBI director general, said: ‘It is absolutely essential that we all put the health of our citizens first, and businesses will continue to step up in the national interest to support the NHS, employees and customers in the weeks ahead.’
The new lockdown will see more than 550,000 business closures in England, according to real estate adviser Altus Group.
The company said this included 401,690 non-essential shops, 64,537 pubs or restaurants, 20,703 personal care facilities and 7,051 gyms or leisure centres.
It added that 21,119 local council schools as well as 2,645 private schools will also have to close in England.
Richard Burge, chief executive of London Chamber of Commerce and Industry, echoed a similar sentiment.
‘The extension of the furlough scheme to the Spring was welcome, but it will remain a cliff edge as we get nearer, as are the end of the VAT and business rate relief periods,’ he said.
‘These must be extended. We also need to see an expansion of the grants programme delivered via councils, based on the number of businesses within a borough, rather than the number of residents.
‘Government needs to understand that this is a London Marathon. You plan for the long-haul, you have feeding and water stations all along the way, and support after the finish line. The Treasury needs to produce their plan for this marathon. At the moment, they are absent on duty and London may fall as a consequence.’
The PM is set to make a televised statement on the ‘next steps’ in the crisis at 8pm, with Parliament being recalled on Wednesday
The new lockdown is likely to send the cost of the furlough scheme through the £50billion barrier.
Official figures showed that the job retention scheme (JRS) reached £46.4billion before Christmas.
The HMRC statistics show there was a sharp upturn in payouts following November’s lockdown and December’s ratcheting up of restrictions in the South East and London.
It means that another four-week closure of England’s businesses – which is already happening in Scotland – will push the figure past the landmark number.
It is likely to reignite concern about the impact of the ongoing pandemic on the economy – and the lives of everyday Britons.
Employers can help workers through the crisis and give them a financial lifeline by offering them furlough, the TUC said.
And self-employed working parents should have automatic access to the self-employed income support scheme, otherwise they could find themselves falling into serious financial difficulty and debt.
TUC general secretary Frances O’Grady said: ‘The health and safety of school staff, children and parents and the wider community must come first. This Government has failed to keep school staff safe in their workplaces.
‘With many schools closed, many families will be frantically trying to find a way to balance their work and childcare commitments.
‘Without further action, many will have no choice but to cut their hours or take unpaid leave from work. This will lead to further hardship and will hit mums and single parents hardest.
‘Employers must do the right thing and furlough mums and dads who can’t work because of childcare responsibilities. And the Government should give all parents the right to work flexibly plus 10 days’ paid parental leave each year.’
A Government spokesman said: ‘We encourage both employers and employees to be as flexible as possible during this difficult time, to support colleagues with childcare responsibilities.
‘That includes providing flexible working and home-working arrangements, as well as considering requests from parents to be furloughed, which is at the employer’s discretion.’
Mr Sunak dramatically extended the furlough scheme in November, but only to the end of March.
Last month he updated it and said the huge bailout will now continue until the end of April to give businesses ‘certainty’, while firms will be able to access emergency loans until the end of March.
Workers are able to get furlough at 80 per cent of their usual wages, up to a ceiling of £2,500 a month, with employers only having to contribute national insurance and pension costs.
Grants for the self-employed will be paid at 80 per cent of average previous profits for November to January, rather than 40 per cent.
Figures released before Christmas showed that the UK economy grew by 16 per cent between July and September after coronavirus lockdown rules were eased – but GDP was still almost nine per cent below where it was at the end of 2019.
The 16 per cent increase in the third quarter of the year represents the largest quarterly expansion in the UK economy ever recorded by the Office for National Statistics since records began in 1955.
The latest ONS data reveals there was a cumulative fall in GDP in the first half of 2020 of 21.2 per cent as the national shutdown from March hammered UK PLC.
The British economy shrunk by three per cent in the first quarter between January and March as the nation felt the first effects of the pandemic before then plummeting by 18.8 per cent in the second quarter as draconian curbs hit hard.
Despite the massive bounce back in the third quarter, the ONS said that UK GDP was still 8.6 per cent below where it was before the pandemic.
Meanwhile, Government borrowing remains at record levels as the UK’s national debt continues to climb above £2trillion, with debt now at its highest level since 1962.
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