Chancellor Rishi Sunak joined the Prime Minister at Tuesday's Downing Street press briefing to overhaul his £30bn Budget support package just six days after delivering it.
The government’s £330bn "Whatever it takes" response to the economic impact of coronavirus also brought comfort to freelancers with a 12-month delay to the IR35 off-payroll rules for private sector engagers.
“I promised to do whatever it takes to support our economy through this crisis – and that if the situation changed, I would not hesitate to take further action. That is what I want to begin doing today,” said Sunak.
As well as enhancing and extending many of the measures announced last week, Chief Secretary to the Treasury, Steve Barclay announced in the House of Commons that the government was delaying the roll-out of the new private sector IR35 regime until 1 April 2021.
While a total of £350bn has been committed to support businesses and individuals, the IR35 delay came in response to growing calls for the government to offer support to the self-employed and freelances.
Equivalent to 15% of UK GDP
The biggest single element in the Chancellor’s rescue package is a package of £330bn bank loan guarantees to help small and large businesses manage cashflows during the pandemic. The sum is equivalent to 15% of UK GDP.
“That means any business who needs access to cash to pay their rent, the salaries, suppliers, or purchase stock, will be able to access a government-backed loan, on attractive terms,” said Sunak.
The Chancellor said his economic package would be delivered through offering liquidity support to large firms with a new loan scheme from the Bank of England. For small and medium-sized firms, Sunak increased the new Business Interruption Loan Scheme announced at last week’s Budget from £1.2m to £5m of loans with no interest due for the first six months.
He said further action would come as the situation evolved through new legal powers in the Covid Bill which enables the government to offer further financial support deemed necessary to businesses.
12 month business rate holiday
Sunak also extended the business rates holiday for all businesses in the retail, hospitality and leisure sector for 12 months. The Chancellor’s universal business rate holiday goes one step further than last week’s announcement which was only eligible for the businesses in those sectors with a rateable value below £51,000.
Sunak offered further £25,000 grants to retail, hospitality and leisure businesses in smaller premises with a rateable value over £15,000 and below £51,000.
And in another adjustment to last week’s Budget, the Chancellor enhanced the small business rate relief grant of £3,000 to £10,000.
Hospitality and leisure businesses had voiced concern about the effect the government’s advice to avoid pubs, clubs and theatres would have on their insurance, but Sunak confirmed that this advice is sufficient for those businesses to claim insurance if they have appropriate business interruption cover for pandemics in place.
The Chancellor also confirmed that mortgage lenders have agreed support struggling customers as a result of COVID-19 with an up to three month payment holiday.
“We have never faced an economic fight like this one,” concluded Sunak. “But we are well prepared. We will get through this. And we will do whatever it takes.”
Reaction to Sunak’s coronavirus measures
ContractorCalculator chief executive Dave Chaplin and director of the Stop The Off-Payroll Tax campaign welcomed the IR35 delay, but wanted to see more: “With contractors and freelancers facing losing work with no sick pay, it was clearly the right and sensible thing to do.”
Qdos CEO, Seb Maley, added: “Given the economic challenges that lie ahead of the UK, now certainly would not have been the right time to roll out needless tax changes that endanger hundreds of thousands of contractors’ livelihoods.”
Mike Cherry, the chairman of the Federation of Small Businesses (FSB), also welcomed the government’s upgraded business support package: “Small firms are having their futures threatened in the here and now. They need support in the here and now.
“This unprecedented package of loan guarantees, business rates breaks and cash grants marks a hugely welcome step forward. The key now is to deliver these measures within the coming days with no hold ups at banks, local authorities or central government.
“Some small businesses are already on the brink – they need time and space from landlords, HMRC and lenders over the next few days before these interventions take effect.”
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