Watch the webinar
This morning's webinar took the form of a conversation between the CBI’s Director-General, Dame Carolyn Fairbairn, and the Secretary of State for Business, Energy and Industrial Strategy, The Rt Hon Alok Sharma. As the Secretary of State revealed, he and Carolyn have been having similar conversations about twice a week throughout the crisis – although today’s was rather more public! We hope you found it useful. We were certainly grateful that the Secretary of State could attend during such a busy time.
Among the issues that Carolyn and the Secretary of State discussed were:
- The importance of the scientific advice
- Getting cash out to businesses – now
- The latest on the Job Retention Scheme (JRS)
- A cautious revival plan
- The new normal and personal protective equipment (PPE).
The importance of the scientific advice
Today’s webinar came in the aftermath of yesterday’s confirmation that the lockdown will be extended for at least three weeks. At several points throughout the session, the Secretary of State emphasised the government’s thinking on this: “I don’t think it can be overstated that, throughout this, we have acted on scientific advice.”
He went on to say that this course of action is in businesses’ best interests, too: “I don’t think there is a conflict between supporting business and making sure we follow the health advice… If we open up too early and we end up having a setback because of a second peak, that is the worst thing we could do in terms of denting confidence among the general population but also confidence in business.”
Getting cash out – now
It’s not just the lockdown extension; the impending end of the month – and payroll – means that many businesses are facing immediate cash flow pressures.
There are, of course, mechanisms for easing this pressure. Carolyn pointed out the newly announced CBILS+, which makes money available for businesses that are too big for the government’s main Coronavirus Business Interruption Loan Scheme (CBIL) but too small for the Bank of England’s corporate debt scheme. CBILS+, Carolyn said, “is a better scheme than we had hoped”, not least because it allows for loans of up to £50 million, rather than the £25 million that had been expected.
But there are still problems with the main CBILS. As Carolyn said, “We still think it is too slow.” Only £1.1 billion has been distributed among 6,000 companies so far. The CBI has proposed ways of getting around this – particularly for smaller companies – such as raising the government’s guarantee for certain loans from 80% to 100%, as well as seeing what can be done through banks’ existing overdraft systems.
The Secretary of State suggested that the numbers may not be as bad as they first appear: there are many more inquiries about loans (“a website visit counts as an inquiry”) than there have been actual applications – although he did add that he’s “taking a great deal of interest” in how quickly those applications are processed.
He also cited the effectiveness of the other schemes, such as the business grants administered through local authorities. There is, he said, a “regular dialogue with local authorities about getting this money out”.
Latest on the JRS
The lockdown extension has also made the JRS more important. Will it be extended, too? The Secretary of State would not be drawn into providing an answer, explaining – understandably – that the JRS is managed by another department, HMRC, and it would be up to the Chancellor, Rishi Sunak, to decide whether more money can be made available for the scheme.
Of course, the CBI has been trying to get an answer to this question because of an important upcoming deadline – tomorrow, 18th April. This is when, if the JRS is not extended, many businesses may have to make decisions about redundancies to allow for the full 45-day consultation period. As Carolyn put it, “There may be thousands of jobs at stake.”
Carolyn did have better news, however. She said that, “We are hoping to hear an announcement on [the future of the JRS] later today.”
She also revealed that “all the evidence” is that the online JRS portal, by which businesses can claim money from the government, will launch on Monday and “payments will start on the 25th, if not earlier”.
Cautious revival plan
The Secretary of State said that he is concentrating on the here and now – making sure that businesses have the money to keep on going through the next few weeks and months. However, he did suggest that there is a future-looking aspect to this, too: “One of the lessons we have learnt from the past is that you have to save jobs…. If companies don’t have to make people redundant, they are ready to restart again.”
Meanwhile, Carolyn said that we do need to start having conversations about a “cautious revival plan” – in part because the revival will look very different for different sectors and, indeed, businesses. “It we transferred some of the thinking from food retail to non-food retail – nurseries, clothes shops – then we could begin to open some of those, which would change their finances.”
In this respect, the Secretary of State has already set an example: he previously sent open letters to particular sectors, including construction and manufacture, explaining what is expected of them from a public health perspective. Carolyn described those letters as “really effective” and the “basis for future safe business practices”.
The new normal and PPE
The Secretary of State put the situation in stark terms: “We have to accept that there will be a new normal. The level at which social distancing will continue… we are not going to go back to the way we were before this pandemic.”
Carolyn said that it’s precisely this fact that makes the CBI’s effort – and the national effort – to source more PPE “profoundly important”. Already, we have worked with the government, businesses and trade unions on this issue, and the response has been, in Carolyn’s words, “terrific”.
But Carolyn did also call for extra support from the government, including over what standards can apply for PPE in different sectors. The PPE for, say, food preparation does not need to be the same as the PPE for healthcare.
If you can help with our continuing search for more PPE, please contact firstname.lastname@example.org.
Key questions we answered:
- Can you explain why the government has, so far, stuck to the message of staying at home and protecting the NHS, and not giving a sense of what the exit strategy looks like?
- Included in the government’s core message of ‘stay at home’, we are also saying that we want people, where possible, to ensure they are working from home to keep businesses going.
- If you are well but not able to work from home and work in a sector, such as construction, where you need to go to work, so long as your employer is following Public Health England (PHE) guidelines then it is possible for you to go to work.
- It is absolutely incumbent upon employers to ensure they follow the PHE guidelines to protect their staff.
- We are seeing businesses continuing to operate during this period.
- On what the future will look like, that is an ongoing dialogue with not just employers, but also the TUC who are an important part of this process.
- On the CBILs scheme, could you consider different grants or government guarantees for businesses struggling to receive cash?
- It is important to consider what we have done so far. We have been driving forward cash grants of up to £25,000.
- There has been £12.3 billion pounds sent to local authorities. Indeed, I had a call yesterday with local authorities on this topic.
- I understand that £3.7 billion has now gone to around 290 thousand businesses.
- I have been regularly speaking to banks, including a number of the biggest lenders. I asked them how they were processing applications, the speed of processing, how they were monitoring the money going out of the door and what additional information they were requiring from businesses.
- I can tell you that this is an issue I am personally very interested in, working day and night, as I am committed to ensure businesses get the support they require.
- On Thursday, we announced a larger version of the CBILs scheme. This scheme aims to cover around 3000 companies which have a turnover of over £45 million, but do not have a credit rating required for the previous scheme. We expect this scheme to be operationalised on Monday.
- Regarding the parameters of this scheme – if you have a turnover of up to £250 million, you can obtain loans of up to £25 million.
- We believe the three support schemes we have in place will cover the whole of UK PLC.
- On the JRS, when will there be clarity on the extension to the scheme?
- We have responded to your concerns and moved the cut-off date which companies need to be on PAYE. We expect this to help around 200,000 jobs as a result.
- Regarding the money needed to implement this scheme, the portal will open on 20th April so people will be able to apply and HMRC will ensure the money gets out to them as quickly as possible.
- Can you tell businesses how the JRS is likely to evolve?
- The JRS is HMRC-administered so I cannot speak for them entirely.
- There is guidance developed and available which answers a whole range of questions. As additional queries are raised, that guidance is amended.
- On the question of the cut-off deadline being moved, that reflects the very live conversation taking place between the CBI and others.
- I will ensure these questions are addressed in the evolving online guidance.
- The scheme is open for a 3-month period initially. After this, the Chancellor will decide on whether to extent it if necessary.
- The key focus for us now is to ensure we get money to people as soon as possible.
- How are the government weighing up the economic implications of this crisis versus the health implications?
- To repeat my earlier point, I do not see a contradiction between us following the health advice and supporting businesses. I think the two are inextricably linked.
- If we re-opened the economy and it led to a second wave of infections, this would be the worst-case scenario as it would dent confidence within the population and confidence in the business community.
- We have to accept that after this, for a period of time, there will be a ‘new normal’. The level of which social distancing will continue for example. We will not go back to the way we were before this pandemic for quite some time. The way people operate in the workplace will have to adapt to social distancing norms.
- I think businesses and people recognise and appreciate this.
- What is your thinking on schools and the possible return to schools?
- They are closed until further notice. We will only re-open schools when we have the medical advice that it is safe to.
- On rents and landlords, what can BEIS do to support businesses with less than understanding landlords?
- We have said there will be a 3-month deferral on rents being paid. I know there are mechanisms that a small number of landlords have tried to use to get rents paid.
- This is something I am aware of and we are considering our options.
- My message to landlords is to please behave responsibly and act in the spirit of the government’s policies.
- There may need to be a second phase of government support to help businesses in the long term. What thought has been put into that?
- We are currently focused on ensuring the current phase works as effectively as possible to ensure businesses get the cash they need to survive.
- To Carolyn: What are the CBI’s top priorities for business over the coming days?
- The delivery of key business support schemes.
- We understand the JRS portal will launch to next week, and we will instil a laser focus on the ‘on-the-ground’ experience for business.
- Will be in regular communications with HMT and HMRC to gauge uptake and delivery.
- We are also feeding in a fresh batch of practical questions to HMRC.
- To our members and businesses broadly, please share your thoughts via coronavirus inbox.
- On CBILS – we continue to monitor the delivery of the scheme. We expect to have fresh data published from UK Finance next Thursday.
- Businesses will welcome the launch of CLBILS on Monday and monitoring the uptake in the first few days.
- Build out the Revival plan – the CBI’s UK Revival Team are starting to build out our thinking on those three phases: restart, recovery, renewal.
- We are looking at which sectors may be best placed to restart when the lockdown is lifted – utilising our Trade Associations’ network. And we are engaging with key stakeholders including the TUC.
- Supporting efforts to tackle the PPE shortage – We are writing to the Cabinet Office with businesses feedback from Wednesday call, and with offers to help Government.
- The CBI are creating four focused working groups to create connections and solve the following problems:
- Fabric PPE
- Visors/eye protection
- As ever, if you can help, please get in touch.