Treasury announces new Covid support

The Chancellor has announced additional support for SMEs and the hospitality and culture sectors in response to the wave of Omicron infections.

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The Chancellor has announced that businesses in the hospitality and leisure sectors in England will be eligible for one-off grants of up to £6,000 per premises and that SMEs will have the cost of Statutory Sick Pay [SSP] covered for Covid-related absences as Omicron cases continue to rise.

Rishi Sunak also announced that more than £100 million discretionary funding will be made available in the coming weeks for local authorities to support around 200,000 other businesses in most need – through the Additional Restrictions Grant – and that £30 million in additional funding will be made available through the Culture Recovery Fund for cultural organisations in England.

The SSP money for SMEs with up to 250 employees will cover any employees taking up to two weeks off work due to Covid from today. Firms will be eligible to make claims retrospectively from mid-January.

The extra money comes in recognition that the rise of the Omicron variant means some businesses are likely to struggle over the coming weeks.

Hospitality UK has been reporting that many businesses have lost 40-60% of their December trade, often their most profitable month. The Government says the grants are equivalent to the monthly cash grants provided to hospitality businesses when they were fully closed earlier this year and argues that many businesses have more cash in the bank than they did at the start of the pandemic.

The devolved administrations will also receive around £150 million of funding through the Barnett formula, comprising around £80 million for the Scottish Government, £50 million for the Welsh Government and £25 million for the Northern Ireland Executive.

The Confederation of British Industry and the Federation of Small Businesses were among those welcoming the measures. FSM National Chairman Mike Cherry said: “These positive measures will help alleviate the intense pressures that small firms are currently under, and hopefully arrest a significant decline in confidence over this year.”

However, others were not as positive. The TUC said the ‘lacklustre’ package was not sufficient to help many workers worried about their jobs, given that SSP is so low. Calling for a new targeted furlough scheme that covers at least 80 per cent of workers’ wages and that guarantees that no-one furloughed is paid less than the minimum wage, TUC General Secretary Frances O’Grady said decent sick pay should be paid at the real Living Wage and should be available to everyone.

New TUC polling shows that 77% of people think the government should reopen furlough at least for some industries if new public health restrictions force businesses to close.  The poll, carried out for the TUC by YouGov, shows that fewer than one in ten (eight per cent) people oppose the reintroduction of furlough due to the Omicron variant.

The Early Years Alliance welcome the SSP cover, but expressed dismay that early years appeared to fall through the cracks when it came to the other additional support on offer and the extended business rates holiday. Moreover, it said schools have benefitted from the Department for Education’s Covid workforce fund which nurseries cannot access, despite having similar staffing issues. CEO Neil Leitch said: “Early education professionals tell us time and again that they feel totally forgotten by this government, even as they risk their own and their families’ health and safety every time they go out to work. They should not have to suffer more of the same neglect.”

Meanwhile, the Government has reduced the self isolation time for Covid from 10 days to seven days for double vaccinated people due to concerns about the impact on staffing of self-isolation amid very high infection rates, although people have to test negative on a lateral flow test on days six and seven before they can emerge from isolation.

The Welsh government has also toughened its rules on homeworking. Those who go to work when they could work from home will from 27th December receive a £60 fixed penalty notice while companies will be hit with fines of £1,000 every time they break the rule.

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