As the government race to build a support structure for businesses and individuals left in crisis from the impact of COVID-19, much has been achieved in a very short time.
All the tax deferrals and initiatives are to be applauded but we have profound concerns both that too many businesses and the self-employed fall through the cracks and that the time scale for delivery is too long.
The first wave to suffer the impact of COVID-19 are the Retail, Hospitality and Leisure sectors. From this perspective, it makes absolute sense to use the Business Rates mechanism to deliver financial support. It disperses the delivery of the grants to the local authorities.
The further grant for businesses that are receiving Small Business Rate Relief or Rural Rate Relief is positive extra step.
However, HMRC is indicating that “Your local authority will write to you if you are eligible for this grant.”
As many business premises are closed and, with every likelihood that the lockdown restrictions will be tightened in the coming days, who is going to receive the letter and take the actions required from the letter? Similarly, if the local council makes the grant in the form of a cheque, how is it going to be banked?
Moreover, this takes no account of the reality of working models today. Countless professionals and start-ups either work from home or in a co-shared workspace. Tradesmen and women tend to effectively use their vehicle as their office. For businesses in serviced offices and units, the business rates are often absorbed by the landlord and effectively included in the rent.
As it stands, these businesses will get no support from their local authority.
In a similar vein, the Coronavirus Job Retention Scheme is a response to the first wave of impacted businesses and provides a route to a much-needed cash injection.
However, HMRC has to build the mechanisms to capture the data on the ‘furloughed workers’ under the scheme and to deliver the payments to employers.
The best estimate is it will be four weeks before HMRC is in a position to process the payments meaning, although covered by the scheme, there is no immediate support for the upcoming March payroll.
One of the requirements to be considered a ‘furloughed worker’ is that the employee is not working for the business.
This is effectively excluding the raft of businesses that need both support on paying their payroll and to keep their employees working albeit largely in a reduced capacity.
The support so far for the millions of self-employed is woefully inadequate and is, in essence, at or around the £94.25 a week Statutory Sick Pay level. This, in turn, is encouraging people to continue to work in circumstances where they should not.
The government is being pressed to deliver a mechanism that will cover 80% of their income in a similar manner to the furloughed workers.
However, there is a strong case to adopt a Universal Basic Income model that would deliver money quickly with no hoops or barriers. Daniel Susskind, a fellow in economics at Balliol College, has written this article in the Financial Times that makes the case https://www.ft.com/content/927d28e0-6847-11ea-a6ac-9122541af204.
The Coronavirus Business Interruption Loan Scheme is due to go live in the next few days but as we wrote in our article earlier in the week http://cooperfaure.co.uk/covid-19-business-support-action-needed/, we have grave reservations that the scheme will prove to be too onerous and over-bureaucratic to provide the immediate financial support that businesses need now.
The stark reality is that many businesses need support in the next few days to meet their payroll costs and to pay their suppliers.
More needs to be done now in a streamlined way. For instance, the government could underwrite, say, a £25,000 overdraft facility or increase in overdraft facility for every business in the land and this could be up and running in days not weeks.
At CooperFaure, we understand the profound impact of COVID-19 on businesses and we are making as much time available as we can to discuss your concerns.
We have reworked my diary to open appointments every weekday afternoon specifically to provide COVID-19 support which can be booked here https://calendly.com/jonathan-cooper/covid-19-support.
In these challenging times, we are reminded of the words of Winston Churchill, “Continuous effort — not strength or intelligence — is the key to unlocking our potential.”