Chancellor Rishi Sunak unveils £4.6bn relief package for UK retail and hospitality sectors

(qlmbusinessnews.com via theguardian.com – – Tue, 5th Jan, 2021) London, Uk – –

Retail, hospitality and leisure sectors to be given one-off grants worth up to £9,000

Larry Elliott Economics editor

Firms in those sectors of the economy hardest hit by stringent new lockdown measures will receive grants of up to £9,000 in a £4.6bn Treasury package designed to keep them afloat to the spring.

The chancellor, Rishi Sunak, said he expected 600,000 business properties in retail, leisure and hospitality to receive financial support from the government through a one-off grant.

Acknowledging that the period ahead would be “difficult”, the chancellor said the government was bolstering its efforts to protect jobs and to prevent businesses from collapsing.

In addition to grants worth £4bn, a further £594m will be made available to local councils to assist businesses impacted by the lockdown but not eligible for the new payments. As part of the package, the Scottish government will receive £375m, the Welsh government £227m and the Northern Ireland executive £127m.

The director general of the British Chambers of Commerce, Adam Marshall, said: “While this immediate cash flow support for business is welcome, it is not going to be enough to save many firms. We need to see a clear support package for the whole of 2021, not just another incremental intervention.

“The government must move away from this drip-feed approach and set out a long-term plan that allows all businesses of all shapes and sizes to plan, and ultimately survive.”

Sunak, who has already spent close to £300bn tackling the economic fallout from the Covid-19 crisis, said: “The new strain of the virus presents us all with a huge challenge – and, while the vaccine is being rolled out, we have needed to tighten restrictions further.

“Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the spring.A

“This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”

The Treasury said there would be a £4,000 grant for businesses with a rateable value of £15,000 or under, £6,000 for businesses with a rateable value of between £15,000 and £51,000, and £9,000 for businesses with a rateable value of more than £51,000.

Some business groups have been calling on the government to extend a business rates holiday for a further year to help firms with their cashflow or to prolong the temporary cut in VAT, which is due to end this month.

Treasury sources did not rule out further announcements but said the grants were intended to tide the worst-affected businesses over until it was clear whether the new lockdowns had been effective. Sunak dropped strong hints that the budget on 3 March would provide the opportunity for a more comprehensive package of economic support.

Many analysts are forecasting that after collapsing by almost a quarter in the first half of 2020 the UK economy will again contract in both the final three months of last year and the first three months of 2021 – thus meeting the definition of a double-dip recession.

Sunak expects more employees to be placed on the furlough scheme – which runs until the end of April – as a result of the measures deemed necessary to control the spread of the virus.

The Treasury said the new one-off grants came on top of existing business support, including grants worth up to £3,000 for closed businesses, and up to £2,100 a month for impacted businesses once they reopen.

Roger Barker, the director of policy at the Institute of Directors, said: “This new grant package is welcome, and will go some way to reassuring the worst affected businesses.

“We are particularly pleased the Treasury has taken on board our recommendation to increase the discretionary local authority grant fund. This policy has helped to reach those who haven’t been able to access other support. The government should be prepared to top up the fund if necessary.

“The chancellor must remain wary of a spring cliff-edge in business support as the furlough scheme and other support measures unwind.”

By Larry Elliott Economics editor