UK businesses seek more support as England’s lockdown set to continue

Business leaders have called for further UK government support for companies as ministers prepare to delay the reopening of the economy.

Boris Johnson will on Monday say that much of the further easing of England’s lockdown curbs will not go ahead as planned on June 21, with a delay of up to four weeks before businesses such as nightclubs are allowed to reopen.

The UK prime minister will announce the delay at a Downing Street press conference, where he will tell the country that “one more heave” to vaccinate more people is needed before final restrictions can be relaxed. He is expected to outline a delay until July 19, with a potential break after two weeks if the data prove substantially better than expected.

Hospitality groups have already warned that continued social distancing in pubs and restaurants will severely curtail earnings during a peak period, while office occupiers are having to rethink their return-to-the-office plans because guidance telling employees to work from home where possible is expected to be extended.

The Institute of Directors, the UK’s oldest employers’ group, said restrictions caused by a delay past June 21 would extend beyond the relief that the government had put in place to help businesses through the pandemic.

Roger Barker, the IoD’s director of policy, said a delay was a “blow for many businesses, particularly those in the retail and hospitality sectors”. Warning that the UK was “approaching a cliff edge”, he said it was vital that further support “is pushed out commensurately with the lockdown extension”.

At the end of June, businesses will face a number of new significant costs, with quarterly rent due next week but the ban on commercial rent evictions ending this month. Landlords are owed as much as £6bn in rent from tenants that were shut during the pandemic, but an end to relief on coronavirus-forced insolvencies could risk thousands more businesses going bust.

On July 1, employers must also start contributing 10 per cent towards furlough costs, while business rates relief tapers down to about two-thirds. Firms are starting to repay interest on government bounceback Covid-19 loans.

The Federation of Small Businesses has called on ministers to delay the tapering of the furlough scheme and extend the rent moratorium for six months, as well as write off bounceback loans for businesses still shut and extend full business rates relief for businesses in retail, hospitality and leisure.

The Treasury is resisting pressure to introduce new business support to help companies hit by the new delay to the final lifting of the lockdown.

The government announced in the spring that it would not withdraw the “furlough scheme” — which provides 80 per cent of usual salary — in its entirety until the end of September.

One senior government figure said that the demand for a 10 per cent contribution to furlough costs from July was still generous compared to other countries including France, where companies now have to pay 25 per cent of the wages of those receiving state support. 

The number of people on furlough has fallen from over 10m at the peak of the crisis to an estimated 1.8m at present. 

The senior figure said the government had introduced a £2bn scheme specifically for councils to distribute funds to companies in hard-pressed sectors that were still struggling — and half of this has not yet been spent.

“The reason we are maintaining various forms of support including the furlough scheme, business rates relief and VAT rate cut for hospitality is because we knew there would be continued uncertainty,” they said.

Claire Walker, co-executive director of the British Chambers of Commerce, said that “the most important thing government can give businesses is certainty about the way forward and the assurance that vital support schemes will be extended”.

Business leaders are also worried about the impact on city centres if workers stay at home for longer and social distancing continues to limit trade.

John Dickie, head of London First, said London businesses had been hoping “to get some of their workers back at scale at least part of the time”. He added: “It is very disappointing. If they are going to delay, the critical thing is to extend help to business in areas currently hamstrung by the rules.”

Jace Tyrrell, chief executive of New West End Company, which represents 600 businesses in central London, said that “a month’s delay with just a week’s notice will have heaped extra costs on already vulnerable businesses”.

Footfall is about half pre-pandemic levels across the West End, he added. “If businesses are to survive this latest blow, the government must commit to extending business rates relief to at least October, and must consider relaxing Sunday trading laws,” Tyrrell said. “It is vital that we give businesses the best possible chance to survive and thrive once shoppers can return to the high street.”

The government has not ruled out further delays if the spread of the Delta variant of coronavirus is not halted. Edward Argar, health minister, told the BBC it was “possible” that more restrictions would be needed. He added that the chief aim was to make sure any easing was irreversible.