Following the Prime Minister’s announcements on 22 September, all eyes were on the Chancellor to outline his vision for further business support as we head into Autumn with additional restrictions in place. The government and the Chancellor have been adamant that the Coronavirus Job Retention Scheme (CJRS) would not be extended. But as the summer came to an end, the need to avoid a cliff edge when the CJRS ends at the end of October became evident as well as further measures to support firms with cash flow in Q3 and Q4 of this year.
The CBI – publicly as well as behind the scenes – has been building a strong evidence base for further government support and for the past few weeks has been ensuring those messages were being heard at all levels of government. We publicly called for a successor to the CJRS, made the case for extending the loan schemes and talked about the need for further tax deferments. So, the Winter Economy Update today was a critical intervention and businesses can be pleased with what was announced:
- A new job support scheme - based on the proposals from the CBI and built on three principles:
- Supports viable jobs
- Targeted support at firms who need it the most, all SMEs eligible but there will be a turnover test for larger companies
- Open to all firms whether they used CJRS or not
- The scheme will run for 6 months and can be claimed alongside the Job Retention Bonus.
- Pay as you Grow scheme - the Bounce Back Loans can be extended from six to ten years, halving average monthly repayments; can make interest only repayments and can pause repayments for six months; they will also have no impact on credit ratings
- CBILs guarantee will be extended for up to ten years
- All loan schemes will be extended until the end of the year and HM Treasury has started work on a successor loan scheme which will begin in January 2021
- Q1 VAT payments which were due in March can now be spread over 11 smaller repayments with no interest due on those payments
- Under Time To Pay, SMEs can extend deferrals for a further 12 months
- The current VAT rate of 5% for hospitality and tourism will be extended until 31 March 2021.
So overall, a bold package for businesses with the Chancellor making it clear he is listening to businesses up and down the country and critically, measures that can preserve skills and jobs to enable a fast recovery. The CBI has also been clear that further business rates relief must remain on the table. If you would like to know more, please get in touch with Fiona Geskes.