Startling Figures Reveal Extent Of Government Support For Beleaguered Economy
by Kevin Pratt
The extent of government support for UK businesses is made clear in official figures released today (27 May), with lenders approving loans of £27.5 billion so far through the three main HMRC-backed funding schemes.
The government has underwritten, completely or in part, loans extended to more than 650,000 businesses via the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
Further government support for the UK economy has come in the form of the Job Retention Scheme, which pays 80% of the salaries of furloughed staff and which has thus far received £15 billion of claims on behalf of 8.4 million employees.
Around 1 million firms currently have staff on furlough. The government will announce later this week how employers will be expected to contribute to salary costs from August onwards, until the scheme ends in October.
The Self Employment Income Support Scheme has received 2.3 million claims with a total value of £6.8 billion. It covers the months March, April and May and, as yet, has not be extended into the summer.
Lender forbearance
In addition to these schemes, the country has urged banks and other lenders, as well as insurance companies, to show forbearance to customers struggling financially as a consequences of coronavirus.
It is estimated that one in six mortgages (1.8 million) is subject to a payment holiday of up to three months.
Last week the government announced that the availability of mortgage payment holidays is to be extended to 31 October 2020.
Government-backed loans
Lenders have extended loans of £18.45 billion through BBLS, which is aimed at sole traders and micro businesses. It currently has a typical daily run-rate of new loans worth £615 million, with 608,000 loans approved through the scheme to date.
CBILS accounts for loans of £8.2 billion to 43,000 business, while 154 larger firms have received finance via CLBILS amounting to £820 million.
The Covid Corporate Financing Facility (CCFF), run by the government and the Bank of England, has so far supported £20.5 billion of lending.
Retailers prepare to re-open
The astonishing volume of support has been revealed as the English retail sector begins to grapple with realities of re-opening for business next week as coronavirus lockdown provisions are relaxed further (details are awaited of the regimes that will come into effect in Scotland, Wales and Northern Ireland).
In England, high street shops, department stores and shopping centres will be able to reopen if they can demonstrate that staff, customers and other visitors will be safe.
Timetable for reopening
- 1 June - outdoor markets and car showrooms. As with garden centres (which are already open), the risk of transmission of the virus is thought to be lower in these environments, where it is easier to apply social distancing
- 15 June - all other non-essential retail including shops selling clothes, shoes, toys, furniture, books, and electronics, plus tailors, auction houses, photography studios, and indoor markets.
Businesses will only be able to open from these dates once they have completed a risk assessment, in consultation with trade union representatives or workers, and are confident they can manage the risks. They must have taken the necessary steps to become ‘Covid-19 secure’.
The government says shops should consider
- placing a poster in their windows to demonstrate awareness of the guidance and commitment to safety measures
- storing returned items for 72 hours before putting them back on the shop floor
- placing protective coverings on large items touched by the public such as beds or sofas
- frequent cleaning of objects and surfaces that are touched regularly, including self-checkouts, trolleys, coffee machines and betting terminals.
Hairdressers, nail bars and beauty salons remain closed due to the higher risk of coronavirus transmission in these environments. The same applies to the hospitality sector, including pubs, cafes and restaurants.
They are unlikely to reopen before 4 July, and only then with tight restrictions.