Sunak urged to explain grant support ‘new money’ claim
Rishi Sunak: ‘huge challenge’
Chancellor Rishi Sunak’s “additional” funding for business was mired in confusion today after it emerged there was no new money for the devolved administrations.
Mr Sunak announced he is offering retailers, pubs, restaurants and other hospitality and leisure companies a £9,000 one-off grant under new Covid support measures.
It was said to be “additional funding” to existing loans and grants, amounting to £375m in consequentials for the Scottish Government.
However, it later emerged on the Treasury’s website that the funding instead “contributes to the overall funding package announced by the Treasury.”
Scottish Labour accused the Tories of an “embarrassing u-turn” that had short-changed Scotland.
Finance Secretary Kate Forbes later added: “We are both surprised and disappointed that the UK Government’s announcement of additional funding for businesses in England will not – despite the initial indications – generate further new funding for the Scottish Government or other devolved administrations.
Kate Forbes: surprised and disappointed
“This is a blow to Scottish businesses, whose expectations had been raised by the announcement, and I will be writing to the Chancellor to raise the issue.”
A Welsh Government spokesperson said: “The UK Treasury has confirmed that today’s announcement does not include new money for Wales.
“This funding is already within our existing Covid funding guarantee. Greater transparency is urgently needed to prevent the confusion these UK announcements cause for people and businesses.”
The latest package had already been criticised as far too little and too short term to meet the growing costs facing businesses which will be shut for up to two months.
The cash is provided on a per-property basis to support businesses through the latest restrictions, and is expected to benefit over 600,000 business properties, worth £4 billion across the UK.
Mr Sunak said: “The new strain of the virus presents us all with a huge challenge – and whilst 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.
“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.”
A further £594 million is also being made available for local authorities and the devolved administrations to support other businesses not eligible for the grants, that might be affected by the restrictions. Businesses should apply to their local authorities.
The new one-off grants come in addition to existing business support, including grants worth up to £3,000 for closed businesses, and up to £2,100 per month for impacted businesses once they reopen.
The government has also provided 100% business rates relief for retail, hospitality and leisure businesses, £1.1 billion existing discretionary funding for Local Authorities, the furlough scheme now extended to April and 100% government backed loans, extended until March.
Businesses welcomed the extra support but called for immediate cash payouts and long term funding that will all them to plan.
British Chambers of Commerce director general, 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.
Adam Marshall: ‘we need a long term plan’ (pic: Terry Murden)
“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.
“Many smaller firms won’t qualify for the full headline amounts set out in the Chancellor’s statement, and will be left struggling to see how this new top-up grant will help them out of their cashflow problems.
“Support must be sufficient to cover not just those on the front line of retail, hospitality and leisure, but also firms in supply chains and wider business communities who are also feeling the devastating impacts of these restrictions.”
Andrew McRae, Scotland policy chairman for the Federation of Small Businesses, said the new cash injection could help a share of Scottish firms survive until the vaccine is rolled out.
“The Scottish Government must ensure this new funding reaches businesses before the end of January,” he said.
“The new £375m [Scotland’s allocation] should be split between cash grants for smaller property based firms, and extra help for non-premises based operators that have had little or no help so far. But before any of this can happen, councils and government need to break the administrative logjam preventing money reaching businesses.
“Independent firms and the self-employed continue to make huge sacrifices. These operators can’t be left high and dry because of poor government systems.”
David Lonsdale, director of the Scottish Retail Consortium, said: “In England these funds will be directed at retail, hospitality, and leisure businesses forced to close down.
“It’s fair and appropriate these new funds are used to support the same types of firms in Scotland.”
- The one-off top-ups will be granted to closed businesses as follows:
- £4k for businesses with a rateable value of £15k or under
- £6k for businesses with a rateable value between £15k and £51k
- £9k for businesses with a rateable value of over £51k
- Business support is a devolved policy and therefore the responsibility of the devolved administrations, which will receive additional (later amended) funding as a result of these announcements in the usual manner:
- The Scottish Government will receive £375m
- The Welsh Government will receive £227m
- The Northern Ireland Executive will receive £127m
- This is on top of the increased funding which has already been guaranteed by the UK Government, to continue to provide the devolved administrations the certainty they need to plan for their COVID-19 response in the months ahead.
- Small businesses in the devolved administrations should also be able to benefit from other UK-wide measures in the Government’s unprecedented package of support for business, including the various business lending schemes (where the repayment terms were made easier as part of the Winter Economy Plan), and the extension of the Self Employment Income Support Scheme.