Rishi Sunak has announced a £4.6bn fresh financial support package for struggling UK companies a day after the government imposed its toughest Covid-19 restrictions since last spring.
The chancellor said the Treasury would provide £4bn of one-off “top-up grants” for an estimated 600,000 retail, hospitality and leisure companies, which can each claim up to £9,000.
There will also be a new £594m discretionary fund made available for councils to support other businesses that are not eligible for those grants but are affected by the restrictions.
Yet business leaders raised concerns that even this extra support would not be enough to save tens of thousands of companies from collapse. The prime minister, Boris Johnson, has organised a call with UK business leaders on Wednesday, where it is expected he will be pressed for more financial aid as companies face months without being able to trade under the third national lockdown.
Mr Sunak also hinted that further support could be forthcoming later in the year, saying that he would “take stock of the range of support that we’ve put in place and set out the next stage of our economic response to coronavirus” in the Budget in early March.
Adam Marshall, head of the British Chambers of Commerce, said that the immediate cash for businesses was welcome, but was “not going to be enough to save some firms”.
He added: “We need to see a longer-term plan to support businesses well beyond spring and throughout 2021. Support must cover not just those on the front line of retail or hospitality, but also firms in supply chains and wider business communities who are also feeling the devastating impacts of these restrictions.”
Roger Barker, director of policy at the Institute of Directors, said the new money “will go some way to reassuring the worst-affected businesses” but that the chancellor “must remain wary of a spring cliff-edge in business support as the furlough scheme and other support measures unwind”.
Other business groups have called for value added tax deferrals, help with business rates beyond the spring and direct support for supply chains to damaged industries such as aerospace and hospitality.
Rain Newton-Smith, CBI chief economist, argued for an extension of the job retention scheme for an additional three months to the end of the second quarter to provide businesses “with a clear line of sight, aiding planning and investment”.
She said that “removing the business rate relief cliff-edge in April will provide much-needed breathing space, as will re-examining the case for VAT deferrals”.
So far the UK government has committed £280bn towards support measures during the pandemic, ranging from business support schemes to extra funding for the NHS and for personal protective equipment.
Officials said the grants announced on Tuesday would take the support offered during the current lockdown to almost £9bn, including the grants of £3,000 per month that were introduced in November. That figure does not include another £5bn to £10bn a month that ministers expect to keep spending on the furlough scheme.
The lockdown announced by Mr Johnson on Monday night will last at least seven weeks and will mean the closure of schools, hospitality, leisure and non-essential retail businesses across England. The general public has been urged to stay at home apart from for specific urgent tasks and exercise.
Ministers are poised to announce new restrictions on entry into England from abroad, with visitors having to prove they have had a negative pre-flight coronavirus PCR test taken less than 72 hours before departure.
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