COVID-19: Weekly UK Public Affairs Round-up
United Kingdom | 18th September 2020
This week, the Government has continued to implement stricter national and regional lockdown measures, as coronavirus cases rise across the UK. As demand for tests increases, concern is growing around the capacity and resilience of the UK’s COVID-19 testing programme. Furthermore, while statistics this week have warned of concerning unemployment and inflation rates, the Government announced £546 million of additional funding for social care providers to help them prepare for the winter months.
National and regional lockdown restrictions tighten
17th September: The Government this week imposed new regional lockdown measures across the UK, with over 10m people now under tighter control. On Thursday, the Health Secretary, Matt Hancock, announced new restrictions for parts of the North East of England. From Friday, in regions including Newcastle, Sunderland, Northumberland and North Tyneside, households will not be permitted to socialise with other households, except for those that have formed support bubbles. Late night operating restrictions will also see entertainment and leisure facilities closed between 10pm and 5am.
This follows statistics indicating that Sunderland has an incidence rate of 103 positive cases per 100,000 people, with other areas of the region currently at above 70. The UK average is estimated at around 50. New restrictions are also anticipated this weekend on Lancashire.
This comes as the Government’s ‘rule of six’ restriction came into effect on Monday, prohibiting any social gatherings greater than six people nationwide. The Government released guidelines on Monday that exempted gatherings for work or education purposes from the rule, as well as weddings and team sports organised in a Covid-19 secure way. Elsewhere, speculation around the likelihood of a London lockdown increased this week, as concerning increases in cases prompted questioning if the UK’s capital should be taking stronger distancing precautions, amid fears of a second wave. It has also been reported that the government is considering a second national lockdown to coincide with October school half-term.
The Prime Minister faces UK testing capacity scrutiny
16th September: This week, the Government’s Covid-19 testing system faced significant scrutiny as an uptick in virus transmission saw a heavy increase in demand, with cases in England up 167% last week from the last week of August
On Wednesday, the Prime Minister faced questioning from the Commons Liaison Committee, where he admitted that the UK’s testing system does not currently have sufficient capacity. He did, however, state that the UK’s testing capacity would be up to 500,000 tests a day by the end of October.
The increase in demand for COVID-19 tests has resulted in a number of testing centres reaching maximum capacity this week. Bolton NHS, for instance, called on the public to stay away from hospitals if they were not seriously ill, following reports that dozens of individuals had been turned away from Royal Bolton Hospital after being unable to access local test centres. Responding to criticism, the Government insisted that increasing testing capacity will continue to be a priority as the country faces the prospect of a second wave of the virus coinciding with the winter flu season.
Unemployment climbs while inflation slows
15th September: New data from the Office for National Statistics (ONS) has shown that the UK’s rate of unemployment has risen to its highest level in two years as a result of the impact of Covid-19. Figures show that unemployment grew to 4.1% in the three months to July, compared with the previous figure of 3.9%. Also this week, the ONS revealed that the UK’s inflation rate fell sharply to a new five-year-low of 0.2% in August 2020, as a result of the effect of the Government’s Eat Out to Help Out scheme.
Given that approximately 695,000 UK workers have been removed from the payrolls of British companies since March, organisations including the CBI have called on HM Treasury to find a replacement to the furlough scheme, which is due to finish at the end of next month. However, the Chancellor, Rishi Sunak, told MPs this week that he would continue to act in “creative ways” to support jobs and employment, despite concerns that the worsening UK economy will create a jobs crisis in the autumn.
£546 million funding for social care winter precautions
17th September: The Government has announced an extra package of £546 million for care providers in England as winter approaches. The funding was announced as part of a “winter plan”, which will aim to curb the spread of Coronavirus in care settings throughout the winter months, and will be accompanied by free Protective Personal Equipment (PPE) for care homes. The funding will sit in the Infection Control Fund, and brings the total funding for infection control measures to over £1.1bn. In addition to this, care home providers will be required to stop all but essential movement of staff between care homes.
The plan comes as the Government attempts to ensure that the rise in cases does not coincide with a rise in deaths among the elderly and vulnerable. Care home operators have also criticised the government over the lack of testing capacity, and the concurrent difficulties creating Covid-secure environments.
- 15th September: The Welsh Health Minister announced the release of a new Winter Protection Plan intended to provide guidance on how health services should prepare for Covid-related challenges during the winter.
- 14th September: Variations on the “rule of six” came into force in Scotland and Wales on Monday. In Scotland, only members of two households are permitted to make up the six individuals, with only 20 people allowed to attend weddings, funerals and other exceptional events. In Wales, the new rule does not apply to outdoor gatherings (up to 30 people allowed) or children under 12. Northern Ireland had introduced a six-person limit for indoor gatherings in August, and currently 15 people are permitted to meet outdoors.
- 13th September: The Scottish Government announced a new £2 million programme of “locally-led green projects designed to help support” the green post-Covid economic recovery of Scottish island communities.
- 11th September: The Northern Irish Government announced further Covid-19 funding of £22.93 million for additional Higher Educational institutions that may be required for the 2020/21 academic year, as well as school PPE costs.
- 17th September: The Government announced plans for two new Lighthouse Labs in Newcastle and Bracknell to boost the UK’s Test and Trace capacity.
- 17th September: The Government has made further changes to the travel corridor list. From Saturday, arrivals from Slovenia and Guadeloupe will be required to quarantine for two weeks, whereas arrivals from Thailand and Singapore will be exempt.
- 17th September: The Government announced Accident and Emergency units in 25 hospitals across England will receive an additional £150 million to expand and upgrade.
- 11th September: The Government announced an investment of £270,000 in research at the University of St Andrews to test different surfaces and coatings for their effectiveness in killing the virus.
|7 day-rolling average||Peak (14th April)||10th September||17th September|
Summary of UK COVID-19 Business support schemes
The following rolling list of UK government business support measures announced in response to the Covid-19 pandemic is updated weekly and is accurate as of Thursday 17th September.
Starting in March, the UK Government has implemented a series of economic interventions aimed at supporting employees, employers and businesses through the uncertainty and potential loss of income resulting from the Covid-19 pandemic, and the restrictions on business activity as a result. Some of these have been revised and extended since being announced, most recently following the Chancellor of the Exchequer’s speech to the House of Commons on 8th July.
An official web portal with details on eligibility and how businesses can apply for support remains open by the Government.
Employment retention measures
Coronavirus Job Retention Scheme: Employers can claim 80% of their usual monthly wage costs for furloughed employees, limited to £2,500 per individual per month, plus the associated Employer National Insurance and minimum automatic enrolment employer pension contributions. Claims can be made to cover the period 1st March – 31st October 2020. From August, furloughed workers will be able to work part-time, with employers sharing salary costs with the Government. Amendments to the scheme announced on 29 May include the following: From August, employers will begin paying National Insurance and pension contributions and the taxpayer contribution will remain at 80 per cent; By September, employers will be expected to begin paying towards wages, with taxpayers contributing 70 per cent of the grant and employers 10 per cent; Throughout October taxpayers will contribute 60 per cent and employers the remaining 20 per cent. 31 July is the last day that you can submit claims for periods ending on or before 30 June. The current Coronavirus Job Retention Scheme will end in October. From 1 September, the Government will pay 70% of wages up to a maximum cap of £2,187.50 for the hours the employee is on furlough. Employers will top up employees’ wages to ensure they receive 80% (up to £2,500). The caps are proportional to the hours not worked. Only companies that have previously furloughed an employee for 3 consecutive weeks between 1 March and 30 June, and submitted their claim before 31 July are eligible to claim through the scheme.
Jobs Retention Bonus: The Government will pay employers a £1,000 bonus per employee if they bring someone back to work who was furloughed, on the condition that they are continuously employed through to January. The employee must be paid at least £520 per month on average, from November to the end of January, which is the equivalent of the lower earnings limit for national insurance contributions. Further details on the eligibility criteria can be found here.
Coronavirus Job Retention Scheme: Employers can claim 80% of their usual monthly wage costs for furloughed employees, limited to £2,500 per individual per month, plus the associated Employer National Insurance and minimum automatic enrolment employer pension contributions. Claims can be made to cover the period 1st March – 31st October 2020. From August, furloughed workers will be able to work part-time, with employers sharing UK Business Support Measures salary costs with the Government. Amendments to the scheme announced on 29 May include the following: From August, employers will begin paying National Insurance and pension contributions and the taxpayer contribution will remain at 80 per cent; By September, employers will be expected to begin paying towards wages, with taxpayers contributing 70 per cent of the grant and employers 10 per cent; Throughout October taxpayers will contribute 60 per cent and employers the remaining 20 per cent. 31 July is the last day that you can submit claims for periods ending on or before 30 June.
Coronavirus Statutory Sick Pay Rebate Scheme: The Government will refund eligible Statutory Sick Pay costs to all employers with fewer than 250 employees. This applies to any claim arising as a result of Covid-19, including precautionary self-isolation, and is limited to two weeks per employee. The online service for reclaiming coronavirus sick-pay scheme is now live, with HMRC guidance on eligibility found here.
Self-employed Income Support Scheme: Most self-employed workers qualify for a grant covering a percentage of monthly profits and earnings. The scheme is open to those with trading profits no greater than £50,000 and who have experienced a loss in earnings as a result of the COVID crisis. At least half of a claimant’s income must come from self-employment, and they must be trading when an application is made, or would be except for COVID-19 disruption. In first instance, this grant covers up to 80% of average monthly profits, capped at a maximum of £7,500 per month and covering three months’ earnings. Applications opened on 13 May 2020 and a final funding payment was accessible on 17 August. The online service for the first grant is now closed. Applications for the second and final grant are now open, and must be made on or before 19 October 2020. The grant will be worth up to 70% of average monthly trading profits, paid out in a single instalment and capped at £6,570.
Self-isolation Low Income Payment: The Government have announced the implementation of a new payment for people on low incomes in areas with high rates of Covid-19, who need to self-isolate and can’t work from home. The scheme will start in Blackburn with Darwen, Pendle, and Oldham as a trial, with eligible individuals who test positive with the virus to receive £130 for their 10-day period of self-isolation. Other members of the same household, who have to self-isolate for 14 days, will be entitled to a payment of £182. The payment will be available to people currently receiving either Universal Credit or Working Tax Credit. If a rapid review of the scheme in the trialled areas is successful, it will be applied to other areas of high Covid-19 incidence.
Business disruption financing measures
Coronavirus Commercial Financing Facility: The Bank of England’s new commercial financing facility is designed to support large companies of investment grade standing. It allows qualifying businesses to issue short-term debt of up to one-year maturity, which will be purchased by the Bank of England. The intent is to support short term liquidity, mitigating against cashflow disruption.
Bank of England Term Funding Scheme: The Bank of England has introduced a new Term Funding Scheme with additional incentives for small businesses financed by the issuance of central bank reserves. Over the next 12 months, the scheme will offer four-year funding of at least 5% of participants’ stock at interest rates at, or very close to, Bank Rate.
Coronavirus Large Business Interruption Loan Scheme: Intended to provide otherwise viable companies with access to short-term liquidity. It provides financing of up to £200m in the form of loans, overdrafts, or invoice and asset finance to businesses with an annual turnover of between £45m and £500m. Lending is for a maximum of three years. Individual lending limits apply, determined using the existing Enterprise Finance Guarantee. Lenders will be one of 40 accredited institutions, including all major high-street banks. To incentivise them to lend, the Government – through the British Business Bank - is guaranteeing 80% of the value of a loan. Companies that borrow over £50 million through the scheme will be subject to restrictions on dividend payments, senior pay and share buy-backs.
Coronavirus Business Interruption Loan Scheme: Intended to provide otherwise viable companies with access to short-term liquidity. It provides financing of up to £5m in the form of loans, overdrafts, or invoice and asset finance to businesses with an annual turnover below £45m. Lending is for a maximum of six years and the Government will pay the first 12 months’ interest. Individual lending limits apply, determined using the existing Enterprise Finance Guarantee. Lenders will be one of 40 accredited institutions, including all major high-street banks. To incentivise them to lend, the Government – through the British Business Bank - is guaranteeing 80% of the value of a loan. On 30th July, the Government announced an extension of the scheme to include smaller businesses which have less than 50 employees and a turnover of less than £9m.
Bounce Back Loan Scheme: Intended to support micro-businesses with short-term cashflow concerns as a result of the COVID crisis. Loans will be made available through accredited lenders to businesses with an annual turnover below £200,000 a year, capped at a maximum of 25% of that figure. The Government will act a guarantor for 100% of the loan, increasing the chance of acceptance and ensuring the loan doesn't need to be secured against personal assets. The Government will pay interest for the first year, with no repayments will be due during those 12 months.
Small Business Grant Funding: Individual grants of £10,000 will be made available through local authorities to businesses eligible for Small Business Rate Relief (SBRR) that already pay little or no business rates.
Trade Credit Insurance Guarantee: Businesses with supply chains that are reliant on Trade Credit Insurance may apply for support from the Government. The Government will now temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market. The Trade Credit Insurance (TCI) guarantee will cover over £171 billion business activity currently insured and the transactions between around 13,000 suppliers and 650,000 buyers.
Tax relief measures
Temporary VAT reduction for hospitality sector: The Government has introduced a temporarily reduced VAT rate of 5%, down from 20%, for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions. The reduction will be introduced from 15th July, and last until 12 January 2021.
VAT Deferral: The Government has deferred VAT payment demands for the second quarter, meaning that no business will be required to pay outstanding VAT until the 30th of June. Businesses will have until the end of the year to reconcile any accumulated tax debts. Any deferred VAT payments should be paid on or before 31st March 2021.
Deferral of Self-Assessment Payment: Income tax payments due under Self-Assessment on 31st July 2020 will be deferred until 31st January 2021. All self-employed individuals will be eligible.
Temporary Changes to the Statutory Residence Test: For the period between 1st March and 1st June 2020, any period spent in the UK by individuals working on COVID-19 related activities will not count towards residence tests that potentially bring global earnings within the purview of UK taxation. These changes are designed to allow skilled individuals to come to the UK and help respond to the pandemic. The guidance has not been updated since April.
Support for Businesses Paying Tax: HMRC have established a dedicated COVID-19 helpline to support businesses and self-employed individuals unable to meet tax demands. Bespoke Time to Pay arrangements will be offered to those businesses with a legitimate need and support their recovery while navigating temporary financial challenges. HMRC will also waive late payment penalties and interest where a business experiences administrative difficulty due to COVID-19.
Targeted support measures
Apprentice and Trainee Bonus Scheme: The Government will provide financial incentives for employers to hire young employees, offering businesses a cash bonus of up to £2,000 per apprentice employed and £1000 per trainee taken on. Further details will be announced in due course.
Future Fund: Targeted at fledgling UK businesses backed by private equity that have suffered from COVID-related disruption, the future fund will provide a convertible loan facility of £125,000 - £5m. To qualify, the company must have raised at least £250,000 in equity investment from third party investors in the last 5 years. The loan must be matched by new third-party investment and be used for working capital. Term length is for a maximum of 3 years, after which any outstanding debt will be converted into stock. The company must have half or more of its employees based in the UK or generate at least half of their revenue through UK sales. The scheme was launched on 20 May and will be open for applications until the end of September 2020.
Innovate UK Investment Fund: A £750 million fund for targeted support for R&D-focused small businesses is being made available through Innovate UK’s grants and loan scheme. The majority of the money has been allocated to support existing Innovate UK customers on an opt-in basis. However, grants or loans of up to £175,000 will be provided to approximately 1,200 businesses not currently in receipt of Innovate UK funding, provided they otherwise meet the criteria for Innovate funding. The first payments will be made by mid-May.
Cash Grant for Retail, Hospitality and Leisure: A cash grant of up to £25,000 will be made available to businesses in England operating in the retail, hospitality and leisure sectors with a rateable value of between £15,000 and £51,000. Businesses in these sectors with a rateable value of under £15,000 will receive a grant of £10,000.
Business Rates Holiday for Retail/Hospitality/Leisure venues: A 100% business rates holiday will be applied from 1st April for a period of one year to all retail, hospitality and leisure venues, including shops, pubs, restaurants and theaters. There is no limit to rateable values.
Business Rate Holiday for Nurseries: Nurseries in England will not have to pay business rates for the 2020-21 tax year. This will apply to properties occupied by providers on the Government’s Early Years Register and are used for the provision of nursery education.
Support Package for Charities: Frontline charities across the UK will benefit from a £750 million package of Government support to ensure they can continue their work during the coronavirus outbreak. The government has also confirmed that charities can access many of the measures announced to support businesses more broadly.
Reopening High Streets Safely Fund: Councils across England will receive access to a new £50 million fund to allow Local Authorities to help support practical and health & safety measures designed to facilitate the quick and safe reopening of non-essential high street and retail spaces in the near future. Councils will also be able to use this money to develop local marketing campaigns to explain the changes to the public and reassure them that their high streets and other commercial areas are safe.
Business Support Checker Tool: The UK Government have released a new “support find tool” on the form of a self-assessed questionnaire for businesses and self-employed people across the UK, to allow them to quickly determine what financial support is available to them, to handle the consequences of the pandemic.
Extension Period on Filing Accounts: Businesses can apply for an additional three months to file accounts with Companies House to help avoid penalties as they deal with the impact of COVID-19. Applications can be made through a fast-track online system.
Coronavirus Business Support Hub: Businesses can now access a new online portal which aims to compile “key information for businesses including on funding and support, business closures, your responsibilities as an employer and managing your business during coronavirus. The hub also includes information for self-employed people and sole traders.”
Business Interruption Insurance: The Government has confirmed that the business impact of Government measures to slow the spread of the COVID-19 virus provides sufficient grounds for businesses to claim on their insurance where they have appropriate business interruption cover in place.
Workplace Skills Learning Platform: The Government has introduced a new online platform that gives people access to free, high-quality digital and numeracy courses to help build up their skills, progress in work and boost their job prospects. The platform provides individuals with free access to several courses designed to boost workplace skills as individuals continue to socially distance at home.
Protection for commercial tenants: The Government has introduced temporary measures to safeguard commercial tenants from aggressive debt recovery actions. Statutory demands and winding up petitions issued to commercial tenants have been temporarily voided and new protections introduced in the use of Commercial Rent Arrears Recovery. Landlords have been asked to work collaboratively with businesses unable to meet rent demands.
Flexible Insolvency rules: Changes will include allowing businesses undergoing restructuring to continue trading and receive supplies. There will also be a temporary suspension of wrongful trading provisions for company directors to remove the threat of personal liability, which will apply retrospectively from 1st March.
Gender Pay Gap Reporting Suspension: The Government Equalities Office has suspended requirement for businesses to report gender pay gap data for the reporting year 2019/20.
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