COVID-19 Business Update – 14 October 2020
Welcome back to our Weekly Update. We hope you and your family are safe and doing well. Read on for this week’s update.
UK Unemployment Hits 3-Year High in August
UK unemployment hit its highest rate in over three years, rising to 4.5% in the three months to August, according to data released by the Office for National Statistics.
The report also showed that the number of people claiming jobless benefits increased to 2.7 million in September. If your business is still struggling to stay afloat and is expected to lay off more employees in the foreseeable future, feel free to message us so we can work out a plan.
Job Support Scheme Extended to Cover Closed Business Premises
The Job Support Scheme will be extended to support all UK businesses legally required to close as a direct result of local or national COVID-19 restrictions (including businesses required to provide only delivery and collection services from their premises).
Through this, employers will receive grants to pay two thirds of the wages of staff who were employed on or before 23 September and are unable to work for a minimum of 7 consecutive days, up to a maximum of £2,100 a month. Employers will not have to contribute to wages but will have to cover pension and national insurance contributions.
The new Jobs Support Scheme will commence on 1 November 2020 and should help cushion the impact of the pandemic. More details can be found in this factsheet with further guidance due “in the coming weeks”.
What Does the Three-Tier COVID-19 Lockdown System Mean?
Under the new three-tier system of COVID-19 restrictions, every area will be classified as being on medium, high or very high alert – tiers one, two and three. Here’s a rundown of the restrictions for each tier as compiled by BBC:
Tier One- Medium Alert
Areas with the lowest rates of infection will be placed in Tier One.
- The rule of six applies, which means that you may not meet in a group of more than six people, indoors or outdoors.
- Face coverings must be worn in various places indoors such as in shops and on public transport.
- You should wash your hands regularly for 20 seconds.
- Pubs, bars, and restaurants all have to close at 22:00.
Tier Two- High Alert
The rules for Tier One also apply in Tier Two.
- You are not allowed to meet socially with people you do not live with indoors.
- You can still meet friends and family outdoors, but only in a group of up to six people.
Tier Three- Very High Alert
Tier Three is where areas with the most rapidly rising transmission of coronavirus will be placed.
- You are not allowed to meet socially with anybody who is not part of your household or your support bubble indoors or in certain outdoor locations.
- You cannot meet in private gardens or pub gardens, but you are allowed to meet in parks, beaches, countryside or forests, as long as you are not in a group of more than six.
- Pubs and bars will be closed unless they are serving substantial meals and only serving alcohol with meals.
Currently, only the Liverpool City Region is in Tier Three.
UK Launches Clinical Trial of BCG COVID-19 Vaccine
Scientists in Britain have launched a study to test if the widely-used Bacillus Calmette-Guerin (BCG) vaccine could help protect people against COVID-19.
Developed almost a century ago, this vaccine was originally designed to fight tuberculosis, but has also been reported to offer broad protection to respiratory infections.
The University of Exeter is leading the UK arm of the trial.
New Grants for Northern Ireland Businesses
Two new schemes that will help businesses in Northern Ireland to recover have been announced. These schemes will be administered by Tourism NI and Invest NI, and will provide £8,000 grants for businesses.
The Invest NI scheme contributes toward the cost of an adviser to carry out an analysis and strategic review of businesses. It is targeted at manufacturing, construction, professional services, information and communication, and technology businesses.
To be eligible for this grant, you must be a micro or small to medium enterprise with annual turnover of at least £500,000 that experienced a decline of 40% in turnover between April-June due to Covid-19.
Meanwhile, existing tourism businesses operating in Northern Ireland are eligible for the Tourism NI scheme. This grant is intended to support such businesses and help them survive the winter period.
If you need guidance with your application or would like to know about other funding assistance programmes, book a consultation with us so we can help you assess your options.
VAT cut extended for Hospitality and Tourism sectors
Part of the Chancellor’s announcement includes an extension of the VAT cut for the hospitality and tourism sectors. The temporary reduction of VAT rates from 20% to 5% will remain in place until 31 March 2021 instead of January.
The cut applies to food and non-alcoholic drinks, accommodation and admission to tourist attractions across the UK.
Giving businesses flexibility to pay back loans
More than a million businesses who took out a Bounce Back Loan will be given flexibility with repayments through a new Pay as You Grow system. We’ll keep you informed as we get more details.
What funding is available for your business?
While many businesses are in a state of financial distress, the government continues to provide support for business recovery.
To cover the impact of the crisis, there are grants made available by the government such as the £1.25b Future Fund and R&D rescue package for fast growth businesses and smaller businesses with a Research & Development focus. The UK government has recently expanded this rescue package for start-ups.
If your business has been severely hit by COVID-19 and you need more support, the government is giving businesses access to financial support through various initiatives such as the Bounce Back Loan Scheme, where you can get up to £50,000 no-interest loans for the first 12 months.
The Business Interruption Loan Scheme offers a maximum loan of £5 million made available through commercial banks, lenders have provided £12.2 billion worth of facilities to 55,674 companies.
You can also claim for 80% of your employee’s wages plus any employer National Insurance and pension contributions if you have put them on furlough because of COVID-19 under the Job Retention Scheme, which has been extended until the end of October. You can check your eligibility here.
With all the financial assistance schemes available for businesses, it can be difficult to assess which one is suitable for your business. Get in touch if you need some help.
COVID-19’s Potential Impact on GDP
Prior to COVID-19, models of what could happen during a pandemic overstated the possible global death toll, but understated the potential hit to GDP. But as a series in The Economist explains, our current pandemic may have lasting impact.
The impacts of shutting down schools may persist for decades. Governments around the world are issuing debt at levels never before seen to finance support for workers and businesses. The virus continues to spread, but the extent of impact in poorer countries remains largely invisible. Rapid development of vaccines mean that they may be available in 2021, but their safety and efficacy are so far largely unknown. The shift to an online world for retail, work, entertainment, and education will likely influence us for years to come. The question we all have to answer is whether those impacts will result in meaningful changes that help to elevate all or that exacerbate divisions and inequalities.
We sincerely hope for positive changes that help to make this a better world!
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