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Chancellor reveals new lockdown grants for retail and hospitality firms

6 January 2021: One-off grants of up to £9,000 per property will be paid to businesses in the retail, hospitality and leisure sectors as the government outlined a new £4.6bn package of measures to help businesses through the latest lockdown.

Chancellor Rishi Sunak stated that the top-up grants would support businesses through the latest restrictions, expected to last until at least mid-February. The government anticipates they will benefit more than 600,000 business properties, worth £4bn in total across the UK. “This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen,” Sunak said.

The grants, provided on a per-property basis, will range from £4,000 for businesses with a rateable value of up to £15,000, to £9,000 for rateable values of over £51,000. A further £594m is being made available for Local Authorities and the Devolved Administrations to support other businesses not eligible for the grants that might be affected by the restrictions. 

Iain Wright, Director for Business and Industrial Strategy at ICAEW welcomed the targeted support but said greater clarity on the detail was needed: “A third lockdown, without accompanying business support packages, would have provided the death knell to many companies that will be essential to help the economy recover later in the year. The Chancellor’s announcement has therefore gone a long way to safeguard firms on the precipice of survival.

“However, it is far from clear whether companies supplying to these sectors will be eligible for this grant support,” Wright continued. “For example, food and drink manufacturing is the biggest sub-sector of manufacturing in this country and is essential to much of retail and hospitality. The nature of this business also means that companies in the food and drink supply chain have large facilities and expensive rateable values of premises. Are these supply chain companies eligible for these top-up grants too?”

Existing support

The new funding comes in addition to billions of existing business support, including grants worth up to £3,000 for closed businesses, and up to £2,100 per month for impacted businesses once they reopen. The government has also provided 100% business rates relief for retail, hospitality and leisure businesses, £1.1 bn existing discretionary funding for Local Authorities, the furlough scheme now extended to April and 100% government-backed loans, extended until March.

Wright also called on government to outline a roadmap of support to help businesses plan and weather the ongoing uncertainty presented by the latest lockdown. “It is understandable that government has to be agile and responsive to the fast-moving public health threat posed by the pandemic and this will inevitably result in stop-start decisions and policy packages. However, this juddering approach, akin to a car sputtering and failing to run on all cylinders, will not help the economy move into a fast acceleration into recovery later in the year.”

Jane Pendlebury, chief executive of hospitality sector association HOSPA, welcomed the support but warned that it was a short-term resolution to a problem that simply shows no sign of going away – no matter how positive we remain about the roll-out of the vaccine.

“We’re clinging on to the life raft at present, but industry operators would benefit significantly from a more far-reaching vision that sets out long-term measures,” Pendlebury told ICAEW Insights. “The end of the business rates holiday and the reduction in VAT for hospitality is fast approaching, especially so if the lockdown lasts until March as feared. So, we would welcome moves from the Chancellor that set out a more wide-ranging set of proposals to keep hospitality going.”

HOSPA along with fellow trade body UK Hospitality are calling for the Budget to be brought forward as part of a greater focus on long term plans. “We know the landscape of the pandemic is ever-changing but any foresight we can glean could prove the difference between planning to reopen and simply giving up and closing for good.”

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