COVID-19: Weekly UK Public Affairs Round-up

United Kingdom | 25th September 2020


As the UK faces up to the sombre reality of newly tightened restrictions on movement in an attempt to minimise the incidences and impact of the recent resurgence in virus transmission, the Chancellor this week unveiled a new Winter Economy Plan, intended to support UK jobs and the economy through what is expected to be a challenging six months. Elsewhere, over one million people downloaded the Government’s much-delayed NHS COVID-19 app, launched this week to assist in NHS Track and Trace efforts.

The Chancellor lays out Winter Economy Plan

24th September: Chancellor Rishi Sunak announced further measures intended to support jobs and the economy this week, as the UK faces tighter lockdown restrictions following a rise in Covid-19 cases.

Sunak set out the Government’s Winter Economy Plan in a speech to the Commons on Thursday. In doing so, he emphasized that measures to support the British economy through the pandemic, which had cost the Treasury around £190bn so far, now required a new approach, tacitly acknowledging that previous hopes of a swift return to economic normality were now remote and what will emerge will be a ‘new normal’.

  • Through a new Jobs Support Scheme, the Government will contribute up to a third of a qualifying employee’s wages, provided that such individuals are able to work at least a third of their normal hours and be fully remunerated by their employer for those hours worked. The scheme will run for six months from November, replacing the existing Coronavirus Job Retention Scheme, or ‘furlough scheme,’ when it expires. Use of the new scheme will not exclude businesses from claiming the Job Retention Bonus of £1,000 for each furloughed employee they take back on to the company payroll. The Self-Employed Grant will be extended on similar terms and conditions as the new Job Support Scheme.
  • The Chancellor also unveiled a Pay as You Grow Scheme designed to help businesses with cashflow. The scheme will see repayment times of Business Support Loans extended from 6 to 10 years.
  • VAT for the hospitality and tourism sector will also stay at a reduced rate of 5% until March.

The new scheme is based loosely on the German equivalent, Kurzarbeit, and is part of the Chancellor’s determination to support “viable jobs”. Around three million workers are currently on furlough or partial leave.

In a further indication that the Government has accepted that the crisis will persist for longer than hoped, and at least throughout the autumn and winter, the Chancellor has also scrapped plans for an Autumn Budget, stating that “now is not the right time to outline long-term plans”. A spending review, nevertheless reduced in scope, is still expected to take place.

Prime Minister announces further restrictions

22nd September: This week the Prime Minister announced the further tightening of restrictions on peoples’ freedom of movement in England, as the Government grapples with bringing the virus transmission rate back under control in the UK.

Speaking in the House of Commons, Boris Johnson set out the new rules, which include:

  • a closing time of 10pm for all hospitality venues;
  • the extending the requirement for customers to wear face coverings to include pubs and restaurants; and
  • the recommendation that employees work from home if possible.

While no expiry date was put on these new measures, and the Government intends to keep them under review to reflect any change in circumstances, the Prime Minister implied that he expected the restrictions to remain in place for up to six months. To emphasise the importance of compliance, the fine for failing to wear a mask when required to do so, or breaking social distancing rules in general, are to be increased to £200 for a first offence.

The Prime Minister’s announcement followed a joint statement from Professor Chris Whitty, the Chief Medical Officer, and Sir Patrick Vallance, the Chief Scientific Adviser, on the now rapid increase in virus transmission. Increasing the Covid-19 alert level from level 3 to level 4, they stated that COVID-19 cases in the UK are doubling approximately every seven days, which unabated could result in a 49,000 new cases being reported every day by October and over 200 deaths per day.

Later in the evening, Johnson addressed the UK directly via a televised statement, calling on the public to ensure that they were following Government guidelines to halt the spread of the virus. He warned of tougher enforcement measures, including fines of up to £10,000 if rules were broken repeatedly, with the potential for more police on the streets and use of the army to help enforce if necessary.

Devolved nations tighten lockdown measures further

While increased Government restrictions designed to reduce the spread of the virus embody a reversal of its former agenda to open up society again, England is the outlier among the other devolved nations who have taken a more cautious approach to lockdown restrictions.

Following announcements last week that both Scotland and Wales would be mirroring England in the “rule of six”, and this week with the 10pm closing time for hospitality businesses, the devolved nations have introduced further lockdown measures to curb the virus’ spread. This week, the Scottish First Minister Nicola Sturgeon announced a ban on social gatherings in households, following similar curbs in Northern Ireland introduced last week. Wales has not allowed mixing of households in private since earlier in the year, and has maintained the 2-metre social distancing rule (as opposed to the 1- metre plus applied in England).

With it universally acknowledged that these new curbs on freedom are likely be in place for many months, these nuances in application reflect attempts across the nations to strike a balance between controlling the virus, and making restrictions both tolerable for the pulic and – to the best extent possible - sustainable for the economy in the long term.

Government launches awaited NHS COVID-19 app

24th September: The Government has announced the launch of its long-awaited NHS COVID-19 app, and urged people across England and Wales to download it in order to boost the effectiveness of the UK’s Track and Trace capabilities. The app, which makes use of Bluetooth technology for contact tracing, contains features such as risk alerts based on postcode district, QR check-ins at venues, symptom checkers and test booking portals. Businesses are required to display the official NHS QR code posters from today so people can check-in at different premises with the app.

This comes as the Chancelor announced a total £12 billion spend on NHS Track and Trace efforts since the pandemic began. The app was downloaded over one million times in the first 24 hours of its release.

Devolved Nations

  • 24th September: The Welsh Government announced a further £84.6 million for bus services to provide more services to meet the challenges of social distancing measures.
  • 24th September: The Scottish Government announced a new £24 billion infrastructure plan to boost jobs and stimulate the country’s green economic recovery from Covid-19.
  • 24th September: Over 600 students are self-isolating following a major outbreak of COVID-19 at Glasgow University, where 172 students tested positive this week.
  • 24th September: The Northern Irish Government announced the allocation of £165 million in COVID-19 response funding for business, infrastructure, culture, schools and local councils.

Other news

  • 24th September: The Government announced the removal of Denmark, Iceland, Curaçao and Slovakia from the list of travel corridors for UK arrivals, following an uptick in Covid-19 cases in those countries.
  • 22nd September: Research from Public Health England has suggested that people infected with both COVID-19 and the flu between January and April were more at risk of severe illness and death.
  • 18th September: In line with the Withdrawal Agreement, the Government has received £31 million in funding from the EU to assist with the UK’s Covid response.

Covid-19 Statistics

7 day-rolling average Peak (14th April) 17th September 24th September
Confirmed Cases 5,195 3,396 6,634
Covid-19 deaths 943 20 40

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 24th 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

Job Support Scheme: The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job. The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped. The scheme will open on 1 November 2020 and run for 6 months, until April 2021.

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. It has now been confirmed that the Scheme will close on 31st October 2020 to be replaced with the Job Support Scheme (see above).

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 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.

Non-financial measures

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.

About FTI Consulting

FTI Consulting is an independent global business advisory firm dedicated to helping organisations manage change, mitigate risk and resolve disputes: financial, legal, operational, political & regulatory, reputational and transactional. FTI Consulting professionals, located in all major business centres throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges and opportunities. The views expressed in any of the articles or other content hosted on this site are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.

More Info

Share this page