Faye Cook from our corporate and commercial team responds to the Chancellor’s statement.
Following the Chancellor of the Exchequer, Rishi Sunak’s, statement in the House of Commons on 24 September, many businesses across the UK will be breathing a sigh of relief that further help will be available to weather the on-going COVID-19 storm.
In particular, many were concerned that, although the effects of the pandemic were not close to being over, the various “lifelines” (to use Mr Sunak’s term) of government support were being switched off in the coming weeks and months.
In response, the Chancellor announced a range of steps to help UK businesses stay afloat and manage cash-flow during these difficult times.
The first of these is to create a new ‘Pay As You Grow’ Scheme to give businesses more time and flexibility to repay Bounce Back Loans (BBLS). This will be welcome news to many businesses as, to date, more than 1.2 million businesses have been granted Bounce Back Loans, which in total amount of over £38bn worth of facilities.
In addition, the government has agreed to extend the application deadlines of all loan schemes (CBILS, CLBILS, BBLS & Future Fund) to the end of November 2020. This will help businesses who have not yet applied for a loan, but still need to in order to survive the winter, particularly as the previous deadline for CBILS applications was due to expire next week.
To further boost cash-flow, the Chancellor also announced changes to existing tax payment schemes, allowing more breathing space for up to half a million businesses who have deferred their VAT bills, as well as an extension to the temporary cut in VAT rates for the tourism and hospitality sectors until March 2021.
Although the further help will undoubtedly be welcome news for some, other businesses, particularly those in the worst hit sectors, may argue that they do not go far enough. However, what is clear is that all businesses, however large or small, will have to continue to evolve and adapt during the uncertain months ahead. They will need to utilise all of the help that is available, as well as focus on their own internal processes and procedures to ensure that cash-flow is tightly controlled and managed.
Information on the new Job Support Scheme (JSS) can be found in this article from our employment team.