£1bn support package for businesses hit by omicron
The Chancellor has announced a £1bn support package including grants for the hospitality sector and a sick pay rebate scheme as omicron variant spreads
Businesses in the hospitality and leisure sectors in England will be eligible for one-off grants of up to £6,000 per premises, plus more than £100m discretionary funding will be made available for local authorities to support other businesses.
Government will also cover the cost of statutory sick pay for Covid-related absences for small and medium-sized employers across the UK.
A further £30m of funding will be made available through the Culture Recovery Fund, enabling more cultural organisations in England to apply for support during the winter.
As hospitality is hit by a sharp decline in business with a decline of up to 60% in December trade, the government has been forced to step in with financial support.
Around 200,000 businesses will be eligible for business grants which will be administered by local authorities and will be available in the coming weeks.
The grants are equivalent to the monthly cash grants provided to hospitality businesses when they were fully closed earlier this year, despite businesses now being still able to trade.
To provide continued support to the cultural sector, £30m further funding will be made available through the Culture Recovery Fund to support organisations such as theatres, orchestras and museums through the winter to March 2022. This follows the closure of many theatres as cast are hit by covid.
The government also said that HMRC is ready to support any business impacted by the coronavirus pandemic through its Time to Pay arrangement, and the Chancellor has asked them to offer businesses in the hospitality and leisure sectors in particular the option of a short delay, and payment in instalments, on a case by case basis, as part of this.
Following a cabinet meeting held on Monday, the decision was taken to introduce no further restrictions in England although this being kept under constant review.
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 £1bn 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.’
Chancellor Rishi Sunak said: ‘We recognise that the spread of the Omicron variant means businesses in the hospitality and leisure sectors are facing huge uncertainty, at a crucial time.
‘So we’re stepping in with £1bn of support, including a new grant scheme, the reintroduction of the statutory sick pay rebate scheme and further funding released through the Culture Recovery Fund.’
To support other businesses impacted by Omicron – such as those who supply the hospitality and leisure sectors – the government is also giving more than £100m to the Additional Restrictions Grant (ARG) fund for local authorities in England.
Local authorities will have discretion to allocate this funding to businesses most in need. The ARG top up will be prioritised for those local authorities that have distributed the most of their existing allocation. This is on top of the £250m of previously allocated funding that remains with local authorities.
In addition, it has already pledged a £860m support package to the devolved nations, allowing them to provide additional support to businesses in Scotland, Wales and Northern Ireland as they see fit.
Kate Nicholls, CEO at UKHospitality, said: ‘This is a generous package building on existing hospitality support measures to provide an immediate emergency cash injection for those businesses who, through no fault of their own, have seen their most valuable trading period annihilated.
‘It will help to secure jobs and business viability in the short term, particularly among small businesses in the sector, and we particularly welcome the boost to funds for the supply chain and event and business catering companies so badly affected by the reintroduction of work from home guidelines.’
For some the measures did not go far enough. Nimesh Shah, CEO at Blick Rothenberg said: ‘The limited support measures announced by the Chancellor today are a ‘drop in the ocean’ when compared to the previous government support packages.
‘The £6,000 per premises grant for eligible businesses offers very little and arguably businesses have already lost more than that during December, as government measures and announcements around Omicron have led to mass cancellation of events and parties in the run-up to Christmas.
‘The Chancellor could have been much bolder without hitting the Treasury coffers too hard, by offering deferral for business rates, VAT and taxes to help cash flow. Whilst the re-introduction of the furlough scheme was unlikely, the hospitality sector will have no choice but to cut jobs if they continue to see bookings drop off and government should be aware of that likely result.’
This view was echoed by Peter Davies, client service partner at WMT Chartered Accountants, who said: ‘All support is welcome, but many businesses are facing catastrophic falls in trade in what should be the busiest trading time of the year. For many £6,000 will not even cover one day’s loss of takings.
‘The biggest single cost for hospitality businesses is staff wages and there is no support at all to help meet this. Many staff will have seen dramatic cuts in their hours and this support package does nothing to enable businesses to help them replace lost wages, tips and tronc at this critical time of year.’
Statutory sick pay rebate scheme (SSPRS)
As increasing numbers of Covid-19 cases means more workers taking time off work, the government is also reintroducing the statutory sick pay rebate scheme (SSPRS).
The SSPRS will help small and medium-sized employers – those with fewer than 250 employees – by reimbursing them for the cost of statutory sick pay for Covid-related absences, for up to two weeks per employee. Businesses will be eligible for the scheme from 21 December and they will be able to make claims retrospectively from mid-January.