Much more clarity is needed from the government to ensure businesses can plan and are not left to guess from one week to the next. Communication, especially about when and how the economy can safely re-open has been scant, and announcements about business support poorly timed and last minute. In an era of unparalleled uncertainty for firms, the level of stress on cash finances and the mental health of business owners has been ratcheted up to fever pitch whilst confidence plummets.
The temporary extension of the furlough scheme in line with a new national lockdown will bring short-term relief to many employers. But for businesses forced to close from Thursday for at least a month the grant support available is little comfort compared to trading through the important Autumn season.
The Coronavirus Job Retention Scheme aka furlough scheme scheduled to end on Saturday evening, to be replaced by the successor Job Support Scheme (‘JSS’), has been extended until 2nd December. The terms mirror those in place during August when the economy had re-opened and hospitality businesses were boosted by the Eat Out to Help Out voucher scheme.
Employers using the scheme suffer the national insurance and mandatory pension contributions for their staff and pay employees as normal for hours worked. Eligible employees are paid 80% of their salary for the non-working time (up to £2,500pcm) funded by a government grant paid to the employer in arrears. Eligibility requires the employed to be ‘on PAYE’ and having been paid via PAYE on or before 30th October. Neither the employer nor employee needs to have used the original scheme to make a claim.
Business West worries that firms may have let employees go just before this date in anticipation of JSS being inappropriate for the worker, based on changes announced 10 days previously. Cashflowing payroll whilst they wait for the funding will challenge vulnerable firms in our region, and making the employer contributions will be difficult for businesses who can’t operate and have no income. Further redundancies and business failures are sadly anticipated.
Grant support for unincorporated businesses is payable via the Self Employment Income Support Scheme at 80% of reference profits, but the same gaps in provision in the scheme continue. For shareholder/directors of limited companies who pay themselves primarily through dividends faced a lack of support through the summer miss out again.
Cash grants are available for businesses whose premises have been required to close, based on their rateable value for business rates purposes, of between £1,334 and £3,000 per month. Whilst this support is welcome it is unlikely to make up for the loss of income had the business been able to trade nor cover all the other costs a business face. Businesses who don’t have a business rates liability but instead pay an all-inclusive rent to their landlord appear to miss out on support except for a grant based on £20 per head of population being paid to Local Authorities to top up support for local businesses.
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