Small firms say Rishi Sunak's job-saving plan doesn't go far enough

Small firms say Rishi Sunak's job-saving plan doesn't go far enough

September 24, 2020

‘Lipstick on a pig’: Small firms and self-employed say Rishi Sunak’s job-saving ‘winter plan’ doesn’t go far enough – but big business welcomes move

Entrepreneurs and small businesses today claimed Rishi Sunak’s new wave of measures to protect jobs were ‘ultimately putting lipstick on a pig’.

The Chancellor this afternoon confirmed proposals for the state to top up the wages of workers forced to cut their hours due to the coronavirus pandemic.

But his plans were criticised for leaving self-employed people to ‘fend for themselves’ and not considering small firms renting office space on a casual basis. 

Under the terms of the new scheme, the Government will top up the wages of people working at least a third of their normal hours.

They will be paid as normal, with the state and employers then increasing those wages to cover two-thirds of the pay they have lost by working reduced hours.

Mr Sunak also extended the self-employment income support scheme and 15 per cent VAT cut for the hospitality and tourism sectors.

Here, a number of small and medium sized businesses along with entrepreneurs have spoken out about what they think of the new measures: 

Dog daycare boss says plans for additional payment holidays are ‘ultimately putting lipstick on a pig’

Jon Kay, director of Bury St Edmunds-based Camp Tails Doggy Daycare

Jon Kay, director of Bury St Edmunds-based Camp Tails Doggy Daycare

‘Pay-as-you-grow, interest-only terms, additional payment holidays, it’s ultimately putting lipstick on a pig. 

‘Debt is debt and for many small businesses struggling to bounce back in a brutal environment it will be the final nail in the coffin. 

‘The Chancellor needs to announce protection for employers as much as employees. 

‘The latter don’t exist without the former, after all. If another lockdown happens, most businesses won’t survive anyway without significant additional support.

‘As a business, we have just about stabilised after the initial lockdown but are petrified that new restrictive measures will be introduced that will again drive our customers away.’

Postnatal education firm owner says millions of self-employed people have been ‘left to fend for themselves’

Jacqueline Harthill, owner of Bristol-based The Happy Parents’ Club

Jacqueline Harthill, owner of Bristol-based postnatal education firm The Happy Parents’ Club

‘The recently self-employed have once again come away from another major Government statement empty-handed. 

‘It’s mind-boggling how millions of self-employed people have been left to fend for themselves. 

‘Once you’ve exhausted your savings, which many self-employed already have, the next step is defaulting on the mortgage, followed by homelessness and, ultimately, a much poorer society. 

‘The millions of people who have fallen through all the cracks in the support packages to date will be suffering financially, physically and emotionally for many, many years to come.’

‘Debt is debt’: Magician says the stress has caused him heart problems and he is ‘at the point of no return’

Eddie Young, a magician at Burton-upon-Trent-based Misterey Entertainment

Eddie Young, a magician at Burton-upon-Trent-based Misterey Entertainment

‘Rishi Sunak is out to protect employees in all kinds of ways while millions of small business owners, the people who pay them, are still on little if any income and in many cases are unable to claim any support other than Universal Credit. 

‘Small businesses are being offered plenty of loans and ‘pay-as-you-grow’ terms, but debt is debt at the end of the day and it simply piles on even more pressure. 

‘All the stress has caused me heart problems and I am at the point of no return.’

Architecture firm boss slams Government’s ‘Dickensian mindset’ when considering small businesses

David Pratt, managing director of Vision Architects in Eastleigh, Hampshire

David Pratt, managing director of Eastleigh-based RIBA-chartered practice, Vision Architects

‘The Chancellor has once again failed to make any material provision for small businesses that have no rateable value. 

‘Rishi Sunak and his advisers appear to think that all small businesses operate out of a leased commercial premises. 

‘This Dickensian mindset is doing nothing to help the millions of small businesses that rent office space on a more casual basis or work from home.’

Laundry boss welcomes new scheme which will ‘help us to keep our team in place’

James Lincoln, managing director of Dagenham-based laundry firm Royal Jersey

James Lincoln, managing director of Dagenham-based laundry firm Royal Jersey

‘Broadly the new scheme will help us to keep our team in place by supporting with the wage bill whilst our trade is still greatly reduced.’

He added: ‘We are an industrial laundry founded in 1915 currently run by the third generation of the founding family and completely family owned still.

‘We have probably the finest client base in Europe servicing the top end hotels in London and our turnover dropped from £180,000 a week pre-Covid to now £20,000 a week and we are fighting for our lives.

‘We have to date borrowed £1million to try and survive however we have already burnt through £800,000 and the new restrictions in place will only hurt us further and without any further help our fear we will not be able to survive.

‘We employ 200 people and the problem is throughout lockdown we had some substantial costs like insurance £25,000 a month, 14 trucks £18,000 a month, rates £5,000 a month, electric, finance and other outgoings which meant we were losing nearly £75,000 a month whilst we couldn’t operate.

Workers are pictured at the Dagenham-based laundry firm Royal Jersey (file image)

Dagenham-based Royal Jersey has operated as a laundry company since 1915. Its staff are pictured in 1933

A bomb hit Royal Jersey’s factory during the Second World War which did not stop it operating

‘Now we are open even with the help of furlough we are still losing close to £15,000 per week due to limited occupancy in London with no overseas travel coming into the top end market.’ 

Small businesses will now be ‘in a better position to cope with future waves of Covid-19’, says software boss

Ben Dyer, chief executive of business management software app Powered Now, based on the Isle of Wight

Ben Dyer, chief executive of business management software app Powered Now

‘The announcement made by the Chancellor this afternoon comes as welcome news. 

‘As construction in the UK has continued to rebound and grow post-lockdown, small and medium-sized enterprises (SMEs) within the trades have very much been the engine room for this recovery.

‘Although many of these businesses are seeing sales increase strongly, many are still dependent on the bounce back loan. The extra cash-flow supports offered by the Chancellor and his Pay As You Grow scheme will help shore up the finances of many SMEs, placing them in a better position to cope with future waves of Covid-19.

‘The new Jobs Support Scheme will also help those businesses looking to reintegrate their team as they look to get back to business. 

‘This again should provide pivotal assistance to those looking to manage their cash-flow, allowing blessed relief as they look to adapt to a new normal.’

IT firm voices concerns over ‘how many of these jobs will still be viable’ six months from now

Pete Watson, chief executive of Atlas Cloud

Pete Watson, chief executive of Newcastle-based IT service provider Atlas Cloud

‘The new Jobs Support Scheme is very welcome for enabling businesses and employees to keep people in work on shorter hours. 

‘I think we can all agree that we need to provide support to millions of people affected by an unprecedented global health emergency.

‘However, I do have concerns over the cost and concerns about how many of these jobs will still be viable after those six months have elapsed.

‘As of last week, the Government has already spent more than £39billion on the more generous furlough scheme.

‘To help create more long-term viable jobs the Government is missing an opportunity by not committing hundreds of millions of pounds to retrain people to take up more sustainable jobs in digital and tech.’ 

Pub boss says new measures ‘will not stop businesses from laying off staff’

Patrick Dardis, chief of pub firm Young’s

Patrick Dardis, chief executive of London-based pub firm Young’s 

‘We can only afford to operate the new restricted hours and the work from home message with a much-reduced workforce. 

‘This will not stop businesses from laying off staff.

‘Our plan before today’s announcement will not alter as a consequence of what was said today.

‘If we have to close some businesses, we will mothball those and will not carry a workforce in the hope they will reopen any time soon, or indeed, at all.’ 

Business leaders praise the Chancellor’s ‘bold steps’ as they say hundreds of thousands of jobs will be saved – but others say support for self-employed is ‘woefully inadequate’

UKHospitality chief executive Kate Nicholls

‘The announcement of further restrictions yesterday was a significant hammer blow that will inevitably depress trading. It was crucial that the Chancellor delivered support today that specifically targeted the hospitality sector which has been hit harder than any.

‘The announcement of flexible employee support is a move in the right direction, but hospitality needs more targeted efforts to support jobs. Almost 1 million people in our sector are still on furlough. We need Government to go further in hospitality, recognising the greater restrictions imposed upon us, and pick up the full cost of unworked hours. This would be a relatively low cost for huge reward for our workforce. Full support to sustain people in their jobs during what could be a pretty bleak winter for hospitality would be a great step forward.

‘Looking ahead, the extension of the VAT cut was absolutely critical. UKHospitality had pushed hard for it, so it is great to see the Government taking note of our major concerns about recovery into 2021, though this must be extended further. The announcement of longer tax deferrals and the option of longer loan repayments should deliver some much-needed breathing room for employers.

‘Things were looking grim for our sector yesterday and we were desperately hoping for some good news. The Chancellor has given us some reason to be positive again, but we urge him to engage with the trade on specific measures to keep people in work. While some of these measures announced today will give businesses a future to shoot for, and hope that they can begin to rebuild, we are still not out of the woods.’

Andrew Goodacre, chief executive of the British Independent Retailers Association

‘We are supportive of further measures to support businesses and protect employment.

‘But we are disappointed that there was no mention of an extension to the business rates holiday beyond April 2021.

‘Now, more than ever, the independent retail sector need the Government’s help if it is to survive this crisis.’

Tom Ironside, director of business and regulation at the British Retail Consortium

‘We welcome the Chancellor’s Job Support Scheme, which will help reduce job losses for eligible companies. 

‘Furthermore, the VAT reduction for cafes and food-to-go will be welcomed as many continue to suffer as a result of low footfall and the Government’s ‘work from home if possible’ guidance. 

‘We look forward to seeing the details of the additional flexibilities on loans and tax deferrals that have been announced.

‘Retail is on a delicate path to recovery, but the looming threat to this remains the £8billion business rates cliff-edge from April 2021. 

‘Retailers need certainty and the Chancellor must take action and bring down the business rates burden in order to avoid unnecessary job losses and shop closures.’

Dame Carolyn Fairbairn, director general of the Confederation of British Industry

‘These bold steps from the Treasury will save hundreds of thousands of viable jobs this winter.

‘Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Further business rates relief should remain on the table.

‘The Chancellor has listened to evidence from business and unions, acting decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal.’

Stephen Phipson, chief executive of Make UK

‘The priority right now has to be saving as many jobs as possible and this is a bold and brave move which industry will welcome.

‘In particular, the Chancellor should take great credit for reflecting on the experience of other countries and implementing similar measures here; this will help us be strongly competitive as we return to normal trading conditions.’

Paul Everitt, chief executive of aerospace trade group ADS

‘This new package will provide much-needed support for employees across our industries who are facing serious challenges.

‘The impact of the sharp and sustained fall in demand for aviation threatens the future of many businesses. The scheme announced today will help minimise the damage and help companies retain valuable skills and experience.’ 

Jonathan Geldart, director-general of the Institute of Directors

‘These new measures should bring some relief to many directors fearing a harsh winter for their businesses and people.

‘As the virus wears on, the Treasury is right to seek a balance between protection and adjustment. However, at first blush it’s not yet clear how much the scheme will help hard-pressed firms hold on to staff.’

Kirstie Donnelly, chief executive of City & Guilds Group

‘Today’s announcement feels more like a sticking plaster than a long-term solution that will help to keep people in work.

‘Whilst the new job support scheme goes some way to saving ‘viable’ jobs in the short term, it also raises the question of what will happen to all of those in ‘non-viable’ jobs in hard-hit industries who are set to be displaced and the resulting job losses that could significantly impact the UK economy.’

Andy Chamberlain, director of policy at the Association of Independent Professionals and the Self-Employed

‘The support for the self-employed announced today is woefully inadequate.

‘Although it is right for the Chancellor to extend Seiss, the support announced today still excludes one in three self-employed people,’ Mr Chamberlain said.

‘Limited company freelancers and the newly self-employed almost entirely missed out on support in the last lockdown and have faced bleak months of financial devastation.

‘Now they face a dark winter ahead unless the government does more for them.’ 

Unions accuse Rishi Sunak of using a plaster to cover a ‘gaping wound’ while jobs have already been lost

Mark Serwotka, general secretary of the Public and Commercial Services union 

‘Any support for jobs and key industries during this unprecedented global pandemic is to be welcomed.

‘However, the Chancellor’s measures are akin to using a plaster to cover a gaping wound.

‘Our members in the commercial sector, aviation and culture are already being threatened with hundreds of redundancies, as employers seek to capitalise on the economic fallout from Covid-19.

‘The Tories’ ideological opposition to increased state intervention is hurting the economy and costing people their livelihoods right now.’

Transport Salaried Staffs Association (TSSA) leader Manuel Cortes

‘Better late than never but the Government’s indecision has already seen jobs lost in droves and caused huge needless anxiety among millions of workers.

‘The Chancellor said they will target support at ‘firms who need it the most’.

‘That must be fine-tuned so that the jobs of our members in the travel trade are saved and high-street travel shops don’t become a thing of the past. We will all need a holiday once the pandemic has passed.’

‘We have called for bold action from government and remain concerned that six months is too short to really stabilise businesses and jobs, which so badly need support and would like clarity over who decides which businesses are viable.’

TUC general secretary Frances O’Grady

‘Unions have been pushing hard for continued jobs support for working people. We are pleased the Chancellor has listened and done the right thing.

‘This scheme will provide a lifeline for many firms with a viable future beyond the pandemic. But there’s still unfinished business. Unworked hours under the scheme must not be wasted.

‘Ministers must work with business and unions to offer high-quality retraining, so workers are prepared for the future economy.’

Paddy Lillis, general secretary of the shopworkers union Usdaw

‘We are pleased that the Chancellor has eventually stepped back from the cliff-edge ending of the jobs retention scheme and we will study the details of the new jobs support scheme.

‘However we are very disappointed that he made no mention of the deep difficulties the retail industry faces.’

John Phillips, acting general secretary of the GMB

‘Whether this is enough to stave off widespread redundancies depends very much on the detail, and it will be judged not just on jobs but on people’s living standards and ability to pay the bills.’

Prospect general secretary Mike Clancy

‘The Chancellor promised creative thinking from the Treasury in advance of his statement, but it was not in evidence in this plan.

‘The new scheme is better than nothing, but it will do little for sectors that will still be effectively closed by Government restrictions who will not be able to bring workers back for the minimum number of hours.’

Unison general secretary Dave Prentis

‘These measures show the Chancellor has been listening to unions and businesses.

‘Supporting the wages of workers is an important first step in the battle to protect jobs across the UK.’

Q&A on Rishi’s new bailout: What is the Job Support Scheme, who can take part and when does it start? 

A job support scheme (JSS) is at the heart of Chancellor Rishi Sunak’s new package of Covid-19 support measures, offering a fresh financial lifeline to workers and businesses as they prepare for a tough winter ahead. Here is a look at when the scheme will start and how it will work:

– When will the scheme be introduced and how long will it last?

It will launch on November 1 and run for six months.

– Who is it for?

The scheme is aimed at protecting viable jobs in businesses which are currently facing lower demand than normal. The aim is to keep people in the workforce, even if they cannot work their usual hours.

– How will the scheme work?

The state will contribute towards the wages of employees who are working fewer hours than normal.

Employers will continue to pay staff wages for the hours they work. But for the hours not worked, the Government and the employer will each pay one third of their equivalent salary.

It means that employees who can only work on shorter hours will still be paid two-thirds of the hours for the time they cannot work.

The Government contribution will be capped at £697.92 per month.

Employees must be working at least a third (33%) of their usual hours and will receive at least 77% of their pay, where the Government contribution has not been capped.

Employers will be reimbursed in arrears for the Government contribution.

– Who qualifies to take part?

The Government has emphasised the scheme will only support jobs which are viable. The employee must not be on a redundancy notice.

Businesses across the UK can potentially take part, even if they have not previously used the furlough scheme.

All small and medium-sized enterprises (SMEs) will be eligible. Large businesses will need to demonstrate they have been adversely affected by Covid-19.

The Government expects that large employers will not be making capital distributions such as dividends while using the scheme.

– How much will the scheme cost?

It will depend on take-up, but could potentially cost about £300 million a month for each million employees who are in the scheme.

– What has the reaction been to the new measures?

Tom Selby, senior analyst at AJ Bell, said of the JSS scheme: ‘While this might be less generous than the furlough scheme, it at least gives some support to employees and valuable help to businesses hit hardest by lockdown measures.’

Mubin Haq, chief executive of the Standard Life Foundation, welcomed the measures, but said many people will still lack support, adding: ‘We strongly urge the Chancellor to look again at the protections and ensure people do not fall through the cracks.’

Helen Barnard, director of the independent Joseph Rowntree Foundation, said that where jobs are truly not viable a ‘right to retrain’ is needed, ‘so that whole areas and industries are not cut adrift amid a gathering storm’.

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