What next for UK businesses?

The government is trying to get the UK economy going again as the COVID-19 lockdown measures are eased. Yesterday, the Chancellor, Rishi Sunak announced a range of measures aimed at increasing demand in the economy and increasing employment opportunities. 

The first point to note is that the furlough scheme is not being extended beyond 31st October and no special dispensation will be made to specific industries or demographics.

There’s not much that’s been announced to give businesses the help they really need. We go through the headline announcements here. As more detail comes to light, we’ll keep you updated. 

£1,000 job retention bonus

The government is introducing a new Job Retention Bonus to reward and incentivise employers who keep on their furloughed employees. It’s a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further details to come.

Wow’s view: we’re not sure the promise of a payment in February 2021 will be enough to convince businesses over the next couple of months to not lay off members of their team. However, for anyone, bringing people back from furlough anyway, the £1,000 will be a welcome bonus.

Some views from business owners

I can’t see that £1k would be the clincher between doing it or not if you’re at the point where you’re making redundancies

The only businesses that might benefit from this would be those large enough to accept the cashflow deficit of keeping those employees on despite the cost, and for them, that X times £1k probably isn’t worth much anyway. Not ungrateful for the money if we’re eligible for it, but doesn’t seem likely to actually help retain jobs to me

Kick Start Scheme

The Kickstart Scheme will directly pay employers to create new jobs for 16-24 year olds who are on Universal Credit and are deemed to be at risk of long-term unemployment. Funding available for each job will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions, and employer minimum automatic enrolment contributions. More to come.

Wow’s view: Depending on the exact qualifying criteria of the scheme, this could be a low risk way for businesses to expand their capacity in the short to medium term.

Traineeships 

Traineeships consist of work experience placements, training, and work preparation for 16-24-year-olds. They last from six weeks to six months depending on need and can lead to apprenticeships, further education and other employment. The government will fund employers who provide trainees with work experience, at a rate of £1,000 per trainee. More to come.

Apprenticeships

The government will introduce a new payment of £2,000 to employers in England for each new apprentice they hire aged under 25. And a £1,500 payment for each new apprentice they hire aged 25 and over, from 1st August 2020 to 31st January 2021. These payments will be in addition to the existing £1,000 payment the government already provides for new 16-18 year-old apprentices, and those aged under 25. More to come.

Wow’s view: If you are used to hiring and training apprentices, these payments will be a welcome boost. It could be worth revisiting your plans for taking on further trainees or apprentices this year. These payments are unlikely to entice you to take on staff you wouldn’t normally have done anyway. 

Temporary Stamp Duty Land Tax cut

Homebuyers won’t pay stamp duty on the first £500,000 of a property’s purchase price on their main home. These changes have taken effect immediately and will run until 31st March 2021..

Wow’s view: Now could be a good time to buy a house if you can get a mortgage. It’s never been harder for business owners to get mortgages. We’ve got a great team who can help you navigate which lenders would be best for you.

Hospitality and tourism VAT reduced to 5%

There are temporary VAT cuts on some goods and services from 15 July 2020 to 12th January 2021. They include:

• food and non-alcoholic drinks from restaurants, pubs, bars, cafés across the UK 
• accommodation across the UK
• admission to attractions across the UK

Further guidance on the scope of this relief will be published by HMRC.

Food discount vouchers

The government will introduce the Eat Out to Help Out scheme to encourage people to return to their locals. This will entitle every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub or another eligible foodservice establishment. The discount can be used unlimited times and will be valid Monday to Wednesday at any eat-in meal (including non-alcoholic drinks) for the entire month of August 2020 across the UK. Participating establishments will be fully reimbursed for the 50% discount. More details to follow on how to register your establishment.

Wow’s view: Who knew 2020 would end with the government issuing voucher codes for us all to eat out?!

What you can do

We all need to work out how these measures will help our businesses. Keep an eye out for more detail being provided on how this will work in practice. In reality, what’s been announced today will not make a meaningful difference in the decisions we’re making. Our advice remains to retain your long term vision, plan as far forward as you feel you can, and act decisively now. If there is anything you’d like to talk through with us please get in touch.

We are running Wow Workshops for Wow clients over the next couple of weeks focussing on ‘What will my business look like in 2021?’ where we look at scenario-planning frameworks and get peer support from other like-minded business owners. 

There are going to be a lot of individuals and business that fall through the cracks, that aren’t directly supported by any of these measures. COVID-19 doesn’t affect all in the same way – it has created or deepened, inequality. There will be some that are relatively unaffected or who can now even thrive – and there will be others who have been utterly devastated by the crisis.