The United Kingdom government announced a whopping £1 billion in support for businesses impacted most by the new variant of the ongoing Covid pandemic, Omicron.
Key Takeaways
- UK govt will provide one-off financing of up to £6,000 per premises to leisure and hospitality sectors.
- UK govt will provide discretionary funding amounting to £100 million to local authorities across the country to support other small businesses.
- For small & medium-sized employers, the government will pay for statutory sick pay for covid-related absences.
- Under Culture Recovery Fund, the government will provide additional funding equal to £30 million. It will help England-based cultural organizations to apply for support vis-a-vis Omicron’s restrictions.
The part of the year considered most profitable for some businesses has turned into a nightmare as Omicron cases surged across the country and the government reimposed restrictions subsequently. As per data available, several businesses have lost up to 60% of their trade. And against this background, the UK government has introduced a £1 billion grant programme with the aim to mitigate the impact of the Omicron.
As many as 200,000 businesses will be available for grants which will be available in the upcoming few weeks; the local government will administer the issuance and release of grant funds. It is pertinent here to note that these grants are equivalent to monthly cash grants delivered to various businesses when they were fully closed back then in the first few months of 2021. Unlike then, now businesses are carrying out operations to some extent.
Throughout the pandemic, the government kept providing funds under various initiatives. On top of it, businesses also quickly adapted live in the pandemic era. Therefore, the economy is now more resistant to restrictions than it was back then at the start of the crisis.
Also, owing to the aforementioned reasons, businesses are now accompanied by more cash in the bank than they have at the start of the businesses. As per data released by the government officials, net cash deposits of hospitality businesses have surged by a mammoth 40% to £7 billion, small & medium-sized businesses by a whopping 79% to £2 billion.
Despite these bright stats, some businesses have suffered from insolvency, too. However, previous to the initial stage of the crisis, insolvencies are 25% less because the ratio of vaccinated people is 50% more than the pre-pandemic levels.
Prime Minister, Boris Johnson said:
“With the surge in Omicron cases, people are rightly exercising more caution as they go about their lives, which is impacting our hospitality, leisure, and cultural sectors at what is typically the busiest time of the year. That’s why we’re taking immediate action to help with an extra £1 billion in grants to these industries and reintroducing our Statutory Sick Pay Rebate Scheme. I urge people across the country to please get boosted now to secure vital protection for yourselves, your loved ones, and your communities.”
Likewise, Rishi Sunak – the chancellor of the exchequer – acknowledged that the leisure and hospitality sectors are facing immense pressure and uncertainty because of the Covid-restrictions. He hoped that £1 billion funding will mitigate the impact of restrictions while helping the aforesaid businesses to stand on their feet once again.
Besides the leisure and hospitality sectors, the government has announced to provide funding worth £100 million under ARG [Additional Restrictions Grant] initiative to support other businesses. This grant, will too, be distributed by the local authorities.
As far as distributing funding is concerned, priority will be given to the businesses most in need. Likewise, those local authorities will be prioritised for funds under ARG who have distributed most part of or all of their current allocations. It is pertinent here to note that ARG funding is beside the £250 million funding earmarked by the UK government for the local authorities.
Statutory Sick Pay Rebate Scheme
As Omicron wreak havoc, and more and more employees go on leaves, the government has launched SSPRS or Statutory Sick Pay Rebate Scheme.
Under SSPRS, small and medium-sized employers with numbers of employees less than 250, will be reimbursed for costs incurring on sick pay leaves. The limit of reimbursement under SSPRS will be up to 14 days or two weeks.
Firms will be able to make claims from mid-January.
Following organizations of the culture sector will be eligible for £30 million Cultural Recovery Fund throughout the winter to March 2022:
- Theaters
- Museums
- Orchestras
As mentioned in the above paragraphs, this grant will be in addition to the already earmarked £240 million funding allocated in the ongoing fiscal year [6th of April 2021 to 5th of April 2022]. Taking the existing initiative into account, the total funding for the cultural organizations has surpassed £2 billion.
The UK Government is working closely with counterparts in the devolved administrations and businesses across all parts of the UK.
As per new announcements, the UK government will distribute as much as £150 million among devolved administrations under the Burnett formula. Below is the breakdown of the Burnett formula funding:
- £80 million for the Scottish government
- £50 million for the Welsh government
- £25 million for Northern Ireland Executives
The Burnett formula funding is part of £860 million funding announced previously by the UK government back then in December 2021 to support businesses in Wales, Scotland, and Northern Ireland.
Recently announced measures will reinforce the following existing packages:
- Under business rates relief, business rates bills of leisure and hospitality sectors will be reduced by as much as 75% reduction throughout the ongoing financial year in addition to getting a 50% capped business rates relief in the next financial year.
- The VAT rate will be reduced to 12.5% for tourism and hospitality sectors with the aim to protect 2.4 million jobs, 150000 businesses, and the cash flow of the two sectors.
- UK govt will provide additional support worth £1.5 billion under Covid Additional Relief Fund to those sectors that did not have business rates support previously.
- Under Moratorium that will remain in place till 2022, the government will provide financial assistance to businesses that are behind on rent. Doing so will save all such businesses from evictions.
- The recovery Loan Scheme will remain in place till June to protect small-sized businesses and to provide them access to much-needed finance.
- Bounce Back Loan repayment flexibility, with borrowers having the option to take a 6 month repayment holiday, three 6 month interest only periods or extend their loan to 10 years, which almost halves the monthly payment.
- The airport and Ground Operations Support Scheme for the aviation sector will remain intact till March 2022. This does not include the £12 billion funding that has already been provided to the same sector throughout the pandemic.
- The main revenue-collecting body, HM Revenue & Customs will also extend support to all those businesses that have been impacted by the Omicron via Time to Pay Arrangement. Rishi Sunak, the chancellor, has specifically instructed HMRC to provide relief to leisure and hospitality sectors if they face issues like short delays or they request tax payments in installments.
Other important information about the funding is as follow:
- £102 million earmarked for Additional Restrictions Grant
- £683 million allocated for targeted grants for leisure and hospitality businesses in England
- £30 million earmarked for Culture Recovery Fund
- £154 million has been allocated for Barnett funding covering all three above
- Funding for the Statutory Sick Pay Rebate scheme will be added to these amounts
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