Omicron-hit hospitality businesses will be able to claim up to £6,000 cash grants and companies can receive compensation for employees’ sick pay, as part of a new support package, announced by the the chancellor.
Rishi Sunak has announced three new “generous” measures to help the arts and hospitality industries get through what should be their busiest period, as restaurants’ bookings plunge and theatres are forced to close amid a surge in Covid cases.
From Tuesday, small and medium-sized companies – those with less than 250 employees – can be reimbursed by the government for the cost of statutory sick pay for Covid-related absences of up to two weeks per employee, said the chancellor.+
“Eligible” hospitality and leisure businesses “impacted by Omicron” will be able to apply for a one-off cash grant of up to £6,000, said Mr Sunak. However, it is not yet clear how employers will be asked to prove how they have been affected.
At what is often their most profitable time of year, many pubs and restaurants have seen cancellations and reduced footfall as people have responded to the rise in cases ahead of Christmas, with Hospitality UK reporting that many businesses have lost 40-60% of their December trade, often their most profitable month.
Around 200,000 businesses will be eligible for business grants which will be administered by local authorities and will be available in the coming weeks.
Given the uncertain situation faced by businesses, the government has chosen to provide generous grants, which are equivalent to the monthly cash grants provided to hospitality businesses when they were fully closed earlier this year, despite businesses now being still able to trade.
The effectiveness of government policies to support the economy through the pandemic and the success of businesses in learning to adapt means the economy is in a different place now than it was at the start of the crisis.
Many businesses have more cash in the bank than they did at the start of the pandemic and net cash deposits for all hospitality businesses have risen by £7 billion (40%), while small and medium-sized businesses in the hospitality sector have seen their cash deposits rise by £2 billion (79%).
Fewer businesses have become insolvent, with insolvencies running 25% lower than pre-pandemic in hospitality, and vacancies are 50% above pre-pandemic levels.
Prime Minister, Boris Johnson said: With the surge in Omicron cases, people are rightly exercising more caution as they go about their lives, which is impacting our hospitality, leisure and cultural sectors at what is typically the busiest time of the year.
That’s why we’re taking immediate action to help with an extra £1 billion in grants to these industries and reintroducing our Statutory Sick Pay Rebate Scheme.
Chancellor of the Exchequer, Rishi Sunak said: We recognise that the spread of the Omicron variant means businesses in the hospitality and leisure sectors are facing huge uncertainty, at a crucial time.
So we’re stepping in with £1 billion of support, including a new grant scheme, the reintroduction of the Statutory Sick Pay Rebate Scheme and further funding released through the Culture Recovery Fund.
To support other businesses impacted by Omicron – such as those who supply the hospitality and leisure sectors – the government is also giving a more than £100 million boost to the Additional Restrictions Grant (ARG) fund for local authorities in England.
Local Authorities will have discretion to allocate this funding to businesses most in need. The ARG top up will be prioritised for those local authorities that have distributed the most of their existing allocation. This is on top of the £250 million of previously allocated funding that remains with local authorities.
As increasing numbers of Covid-19 cases means more workers taking time off work, the government is also reintroducing the Statutory Sick Pay Rebate Scheme (SSPRS).
The SSPRS will help small and medium-sized employers – those with fewer than 250 employees – by reimbursing them for the cost of Statutory Sick Pay for Covid-related absences, for up to 2 weeks per employee. Firms will be eligible for the scheme from today and they will be able to make claims retrospectively from mid-January.
As part of this support announced today, the devolved administrations will 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.
This contributes towards the £860 million of further funding announced by the UK Government in the last week to support the devolved administrations, allowing them to provide additional support to businesses in Scotland, Wales and Northern Ireland as they see fit.
These additional measures will reinforce the existing package of business support, including:
- business rates relief meaning that the majority of businesses in the hospitality and leisure sectors will see a 75% reduction in their business rates bill across the entire financial year and a new 50% capped business rates relief next financial year;
- a 12.5% reduced rate of VAT for hospitality and tourism to support the cash flow and viability of around 150,000 businesses and protect over 2.4 million jobs, until the end of March;
- the £1.5 billion Covid Additional Relief Fund for businesses that have not previously had business rates support;
- businesses will be protected from eviction if they are behind on rent on their premises, thanks to the moratorium in place until March 2022;
- access to finance for SMEs through the Recovery Loan Scheme to June; and
- Bounce Back Loan repayment flexibility, with borrowers having the option to take a 6 month repayment holiday, three 6 month interest only periods or extend their loan to 10 years, which almost halves the monthly payment.
- support for the aviation and travel sectors, including over £12 billion since the beginning of the pandemic, and the Airport and Ground Operations Support Scheme (AGOSS) until the end of March 2022.
- HMRC stand ready to support any business impacted by the coronavirus pandemic through its Time to Pay arrangement, and the Chancellor has asked them to offer businesses in the hospitality and leisure sectors in particular the option of a short delay, and payment in instalments, on a case by case basis, as part of this.