Emergency measures to boost the South West's vital hospitality and economy have been broadly welcomed but there are fears the raft of measures outlined by Chancellor Rishi Sunak do not go far enough.
Julie Hawker, Board Director of Exeter Chamber of Commerce, said that many businesses, including the night-time bars and clubs, effectively face a pause on income during the winter months.
She said: "While undoubtedly the new schemes will help in the immediate future, there is a concern they won’t go far enough to protect otherwise viable businesses and their employees.
“This, coupled with the end of the Brexit transition period, should be a key focus for Government to support the economy over the longer term.
“It continues to be vital for the Chamber, that all sectors in the Greater Exeter area are supported through the winter period ahead and will continue to lobby and provide support wherever we can."
While hospitality and its suppliers will be hardest hit, all business sectors will be affected, said Mrs Hawker.
She said: “The next six months will be critical for all business sectors with a very challenging combination of Covid related restrictions and Brexit. Indeed, latest stats from ONS show that the economy has shrunk by 11.7% compared to pre-lockdown and British Chambers of Commerce state that, due to Covid crisis, there’s been little time to plan for Brexit with just 38% of businesses saying they’ve done a risk assessment for change in trading conditions in January."
Support outlined in Sunak's Winter Economic Plan include a new Job Support Scheme, the cut in VAT for hospitality, the extension of self-employment income support and more flexible pay back terms on business loans.
Patrick Tigwell, Partner at Thomas Westcott Chartered Accountants said that the South West business community will now be breathing a 'collective sigh of relief'.
He said: "This has been a particularly tense period with the Coronavirus Job Retention Scheme (JRS) due to finish at the end of October. The recent announcement of further restrictions has added to the pressures many businesses face."
The most significant development is the launch of the Job Support Scheme. Starting on 1 November, it following the Job Retention Scheme (furlough scheme) on 31 October.
Mr Tigwell said: "The name of the Job Support Scheme gives a subtle message as to how it differs from the JRS. The Chancellor emphasised that it is designed to protect viable jobs. It is not intended to keep people in jobs that only now exist because of Government support. It is designed to allow employers to put staff on reduced hours, which could be especially helpful for our region’s seasonal hospitality businesses over the winter."
KEY POINTS:
The Government will fund up to a third of an employee’s lost wages if their hours have been reduced as a result of the pandemic. Another third would be matched by the employer. So, for example, an employee who usually earns £2,000 and is working half of their usual hours would receive £1,000 as normal pay, £333 from the Government and £333 from the employer.
It is open to any small or medium-sized business (SME), regardless of sector. This is good news for the South West, where our economy is largely dependent on SMEs. Larger businesses will need to prove lost turnover as a result of the Covid-19 crisis in order to quality.
Employers can use the scheme for any employees, regardless of whether or not they have previously been furloughed.
It will run from 1 November until April 2021.
The Chancellor also announced more time to repay loans and launch of Pay as you Grow. The repayment period for bounce back loans has been extended from six to ten years. The Pay as you Grow initiative will also offer interest only payments and payment plans for businesses that have been especially hard hit.
Businesses can now apply for bounce back loans or Coronavirus Business Interruption Loans (CBILS) until 31 December. This could be a good opportunity for those businesses that did not need this finance earlier in the pandemic but are now faced with difficulties.
Businesses that deferred their VAT payments as a result of the pandemic will now not need to pay a lump sum at the end of March. Instead, businesses can now spread these payments over 11 smaller sums, with no interest.
And the region’s hospitality businesses, including restaurants and hotels, can now also benefit from the extension to the 5% VAT rate , which was introduced in July. This was due to finish on 13 January but will now run until 31 March.
Mr Tigwell said: "Although these initiatives may not provide every business with a lifeline, they are likely to be widely welcomed. Overall, I see today’s announcement as providing South West businesses with positive news. As always, the devil will be in the detail."
