COVID-19: Weekly UK Public Affairs Round-up | FTI Consulting

COVID-19: Weekly UK Public Affairs Round-up

United Kingdom | 15th January 2021


This week Health Secretary Matt Hancock laid out the full plans for the largest vaccination programme in British history. The effort is under immense pressure to succeed, as daily death tolls from COVID-19 continue to rise throughout the country. Amid continued pleas for people to stay at home, Scotland became the first administration to toughen lockdown measures, with a crackdown on rule-breakers expected to follow in England. As a result, Chancellor Rishi Sunak is advising that economic forecasts are going to get worse before they gets better, a forewarning as to what his March budget might contain.

UK Government publishes vaccination programme

11th January: On Monday, Health Secretary Matt Hancock published the full plan for the rollout of COVID-19 vaccinations in the UK. The rollout will be the largest vaccination effort in British history, employing the NHS, devolved administrations, local councils and the armed forces.

It is expected that there will be the capacity to deliver at least 2 million vaccinations a week by the end of the month thanks to the accelerated rollout in hospitals, local vaccination sites and around 50 mass vaccination centres. This means that all those in the four highest risk categories as defined by the Joint Committee on Vaccination and Immunisation (JCVI), will be offered vaccinations by 15th February. Ultimately, the plan forsees that every adult in the nation will be offered the vaccine by Autumn.

Speaking to the Public Accounts Committee on Monday, Chief Executive of the NHS, Sir Simon Stevens, described the plan as being “two sprints and a marathon”, with two sprints to vaccinate the top four risk groups by mid-February, and the remaining priority groups by the end of April, followed by a marathon programme to roll the vaccine out universally through the Summer and Autumn.

The need for success

The vaccination plan comes at a somber time for the nation as daily death tolls continue to rise; on Wednesday 1,564 people died within 28 days of a positive test, the highest figure recorded since the pandemic began. It is expected to rise even further in the coming weeks, as the increase in transmission over the festive period feeds through into hospitalisations.

There has been some debate over the prioritisation of the vaccines, with frontline workers (other than those in the NHS) not expected to receive their jab until after February. While the government maintains their determination to see schools re-open and other key workers inoculated as soon as possible, it so far chosen to directly follow the advice from the JCVI on prioritisation.

The Chancellor warns of a tough road ahead

11th January: On Monday, Chancellor of the Exchequer Rishi Sunak, delivered a statement to the House of Commons on the state of the UK economy. In the speech, the Chancellor reported that GDP had fallen by 18.8% in Q2 2020, a direct result of the pandemic. Furthermore, whilst the easing of restrictions had allowed the economy an opportunity to partially recover, it remained 6.7% smaller than it was prior to the pandemic, since when more than 800,000 people had been made redundant.

Sunak’s statement laid out the damage wrought on the economy by the pandemic. The total cost of the fiscal stimulus so far sits at over £280 billion as businesses and individuals alike continue to receive direct financial support from the Government. Since March 2020 some 10 million employees had benefited from the Job Retention (furlough) Scheme with a further 3 million people being awarded self-employment grants.

Resisting calls for Business Groups for fresh package of business support, the Chancellor implied on Monday that no further measures will be announced until the the Budget, scheduled to be announced on 3rd March.

Moderna vaccine approved by MHRA

8th January: On Friday, the UK Government confirmed that the COVID-19 vaccine developed by Moderna had been given regulatory approval by the Medicines and Healthcare products Regulatory Agency (MHRA). This makes it the third coronavirus vaccine to be approved for use in the UK. Like other vaccines currently in circulation, the jab produced by Moderna requires two doses for maximum efficacy.

Following approval, the Government announced it has ordered a further 10 million doses of the vaccine, taking the total purchased doses to 17 million. In total, UK has now purchased over 367 million doses of various vaccines, including orders of the previously approved Pfizer/BioNtech and Oxford/AstraZeneca vaccines. Speaking to the Public Accounts Committee on Monday, Kate Bingham, Chair of the Vaccine Taskforce stated that the average cost of each dose across all vaccines is £10.

Scotland announce tougher measures

13th January: On Wednesday, First Minister of Scotland Nicola Sturgeon announced a raft of tougher new restrictions throughout the country. Under the new rules, those who worked from home in the first lockdown in March have been instructed to do so again, only shops selling essential items will be allowed to offer click and collect services, and takeaway services must now operate from a hatch or a doorway. The rules, which come into force on Saturday are designed to help close an “apparent loophole” in current restrictions where people leave the house for essential reasons but stay out for non-essential ones. With this in mind, the consumption of alcohol in public outdoor places has also been restricted, effectively ending the popularised lockdown trend of takeaway pints.

Scotland currently has close to 1,800 patients in hospital with COVID-19, a number which is expected to rise, leading to warnings that hospitals could soon be overwhelmed. The Scottish Chambers of Commerce nevertheless warned that the new rules would “only add to the growing desperation of businesses.”

The first to act

The decision of the Scottish Government to act has only increased pressure on other administrations to act in adopting tougher measures. As part of the national effort to promote compliance, Home Secretary Priti Patel warned ‘the minority not adhering to new rules’ that police will now move quicker to fine those found to be in breach of restrictions. If widespread reports of misdemeanour continue in coming days, then serious consideration to tougher restrictions in England seems certain to follow.

Devolved Nations

  • 13th January On Wednesday morning, the Scottish Finance Secretary Kate Forbes MSP called on the UK Government to release £21.3 billion currently held in the COVID-19 reserve, as “virtually all” of the £8.6 billion received so far by Scotland had already been spent. Forbes believes that if the COVID-19 reserve was to be released, Scotland could expect £1.7 billion in additional funding.
  • 13th January: On Wednesday, £180 million in funding became available to the Welsh hospitality, leisure and tourism sectors on Wednesday as the Economic Resilience Fund Package opened. A typical hospitality business with six full-time staff could be eligible to receive around £13,000. The fund is expected to assist up to 8,000 companies.

Other News

  • 10th January: The Department of Health and Social Care announced on Sunday that rapid, regular testing for those without symptoms would be made available across the country from this week. Those unable to work from home will be the first targeted under this expansion of asymptomatic testing.
  • 13th January: The Government confirmed on Wednesday night that the requirement for arrivals at UK ports of entry to evidence a negative COVID-19 test taken within 72 hours will be bought into effect only from 18th January, not 15th January as previously advised.
  • 14th January: All individuals arriving at UK ports of entry from destinations in South America, Portugal and Cape Verde will be banned from entering the country from 15th January. The announcement reflects concerns following the identification of a new COVID-19 variant first detected in Brazil.

Covid-19 Statistics

Daily Last 7 days Rate per 100k resident population
Positive Cases 47,525 374,775 (-7.2%) 614.8
Deaths 1,564 7,421 (54.7%) 8.2

Summary of UK COVID-19 Business support schemes

The following rolling list of UK government business support measures announced in response to the Covid-19 pandemic is updated weekly and is accurate as of Thursday 14th January 2021.

The UK Government has implemented a series of economic interventions aimed at supporting employees, employers and businesses through the uncertainty and potential loss of income resulting from the Covid-19 pandemic. Some have been revised and extended since being announced.

There is an official web portal with details on eligibility and how businesses can apply.

Employment retention measures

Job Support Scheme: The Job Support Scheme is designed to protect viable jobs in businesses that are facing lower demand over the winter months due to Covid-19 and keep their employees attached to the workforce. The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction). This will ensure that employees earn a minimum of 73% of their normal wages overall, capped at earnings of £3,125. The scheme will open on 1 November 2020 and run for 6 months, until April 2021. On 22 October, the Government reduced the number of hours employees are required to work to qualify from 33% to 20% of their normal hours, rather than the previous 33%. Employer contributions will also be reduced from 33% for hours not worked, to 5%.

On 9 October, the Government altered the Scheme to give further support to business’ required to close in local lockdowns. The Government will pay two thirds of employees’ salaries, to a maximum of £2,083, although their employer has the discretion to pay more than this if they wish.

As of 1 October, the Job Support Scheme has been postponed with the Coronavirus Job Retention Scheme extended as a result of national lockdown restrictions.

Coronavirus Job Retention Scheme: Since March, employers have been able to claim 80% of their usual monthly wage costs for furloughed employees, limited to £2,500 per individual per month, plus the associated Employer National Insurance and minimum automatic enrolment employer pension contributions. Claims were originally able be made to cover the period 1st March – 31st October 2020. From August, furloughed workers have been able to work part-time, with employers sharing salary costs with the Government. Since August, for hours not worked by their employee, employers have been only be asked to cover National Insurance and employer pension contributions.

The scheme was planned to close on 31st October, and was originally extended until 31st March 2021. On 17th December it was announced that the scheme would be extended by a further month until 31st April 2021. The extended scheme will continue to allow employers to continue to claim 80% of their usual monthly wage costs for furloughed employees. Employers do not have to have used the CJRS previously, but claims must relate to employees who have been on the payroll prior to 30th October.

The government published further guidance on 10th November on how to claim. The update stated that any claims after 1st November must be submitted by 11.59pm 14 calendar days after the month being claimed for. Additionally, 30th November is the final day employers can submit or change claims for periods ending on or before 31st October. The government also intends to review the scheme in January to see whether economic circumstances are improving enough to ask employers to contribute more. The Government updated advice on 19th November to provide clarity on valid excuses for missing the claim deadline. Employers must contact HMRC to ask about submitting a late claim.

Jobs Retention Bonus: The Government will pay employers a £1,000 bonus per employee if they bring someone back to work who was furloughed, on the condition that they are continuously employed through to January. The employee must be paid at least £520 per month on average, from November to the end of January, which is the equivalent of the lower earnings limit for national insurance contributions. Further details on the eligibility criteria can be found here.

In light of the extension of the Job Retention Scheme, the Job Retention Bonus will no longer be paid in February, but a retention incentive will instead be paid at a time the Government deems appropriate.

Coronavirus Statutory Sick Pay Rebate Scheme: The Government will refund eligible Statutory Sick Pay costs to all employers with fewer than 250 employees. This applies to any claim arising as a result of Covid-19, including precautionary self-isolation, and is limited to two weeks per employee. HMRC guidance on eligibility found here. As of 28th October, employers will be able to ask employees for a “shielding note” from a doctor or health authority advising them to shield.

On 10th November, the provision of two weeks Statutory Sick Pay was extended to include those who have been advised by letter to shield due to clinical vulnerabilities should they be unable to work.

Self-employed Income Support Scheme (SEISS): Most self-employed workers qualify for a grant covering a percentage of monthly profits and earnings. The scheme is open to those with trading profits no greater than £50,000 and who have experienced a loss in earnings as a result of the COVID crisis. At least half of a claimant’s income must come from self-employment, and they must be trading when an application is made, or would be except for COVID-19 disruption. Two initial grants closed for applications on 13th July and 19th October 2020, and covered up to 80% and 70% of average monthly trading profits respectively.

The extension of this scheme, announced on 24 September, will provide two grants and will last for six months, from November 2020 to April 2021. Grants will be paid in two lump sum instalments each covering a three-month period. The first grant will cover a three-month period from the start of November until the end of January. The Government will provide a taxable grant covering 20 per cent of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped originally at £1,875 in total. As of 22nd October, the Government have doubled the grant to a £3750 cap. The second grant will cover a three-month period from the start of February until the end of April. The Government will review the level of the second grant and set this in due course.

On 5 November, the Government announced it will provide a SEISS grant extension, with two further grants available for two three month periods covering November 2020 to January 2021 and February 2021 to April 2021. The initial grant will provide a grant equivalent to 80% of 3 months average monthly trading profits, capped at £7,500. As of 29th November, the online service to claim the third grant is open, with deadline for applications 29 January 2021.

Self-isolation Low Income Payment: From 28th September, the Government have made self-isolation a legal requirement, and introduced a £500 payment for those on lower incomes who cannot work from home of who have lost income as a result. Fines for those breaching self-isolation requirements start at £1000, increasing to £10,000 for repeat offenders. Just under 4 million people who are in receipt of benefits in England will be eligible for this payment, which will be available to those who are required to self-isolate from 28 September.

Business disruption financing measures

Coronavirus Commercial Financing Facility: Introduced in March, The Bank of England’s new commercial financing facility is designed to support large companies of investment grade standing. It allows qualifying businesses to issue short-term debt of up to one-year maturity, which will be purchased by the Bank of England. The intent is to support short term liquidity, mitigating against cashflow disruption.

Bank of England Term Funding Scheme: In March, the Bank of England has introduced a new Term Funding Scheme with additional incentives for small businesses financed by the issuance of central bank reserves. For 12 months, the scheme will offer four-year funding of at least 5% of participants’ stock at interest rates at, or very close to, Bank Rate.

Coronavirus Large Business Interruption Loan Scheme: This is intended to provide otherwise viable companies with access to short-term liquidity. It provides financing of up to £200m in the form of loans, overdrafts, or invoice and asset finance to businesses with an annual turnover of between £45m and £500m. Lending is for a maximum of three years. Individual lending limits apply, determined and administered using the existing Enterprise Finance Guarantee. There are 40 accredited institutions, including all major high-street banks. To incentivise them to lend, the Government – through the British Business Bank - is guaranteeing 80% of the value of a loan. Companies that borrow over £50 million through the scheme will be subject to restrictions on dividend payments, senior pay and share buy-backs. As of 30 November, there are 27 lenders taking part in the scheme, including all main retail banks. On 17 December, the application deadline for the scheme was extended to 31 March 2021.

Coronavirus Business Interruption Loan Scheme: This is intended to provide otherwise viable companies with access to short-term liquidity. It provides financing of up to £5m in the form of loans, overdrafts, or invoice and asset finance to businesses with an annual turnover below £45m. Lending is for a maximum of six years and the Government will pay the first 12 months’ interest. Individual lending limits apply and will be determined and administered by the existing Enterprise Finance Guarantee. There are 40 accredited institutions, including all major high-street banks. To incentivise them to lend, the Government – through the British Business Bank – is guaranteeing 80% of the value of a loan. On 30th July, the Government announced an extension of the scheme to include smaller businesses which have less than 50 employees and a turnover of less than £9m. Applications to the Scheme will close after 30 November. As of 30 November, there are 117 lenders participating in the scheme, including all main retail banks. On 17 December, the application deadline for the scheme was extended to 31 March 2021.

Bounce Back Loan Scheme: This is intended to support micro-businesses with short-term cashflow concerns as a result of the COVID crisis. Loans will be made available through accredited lenders to businesses with an annual turnover below £200,000 a year, capped at a maximum of £50,000. The Government will act as guarantor for 100% of the loan, increasing the chance of acceptance and ensuring that the loan does not need to be secured against personal assets. The Government will pay interest for the first year, with no repayments due during this period. On 17 December, the application deadline for the scheme was extended to 31 March 2021.

Trade Credit Insurance Guarantee: Businesses with supply chains that are reliant on Trade Credit Insurance may apply for support from the Government. The Government will now temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance, ensuring the majority of insurance coverage will be maintained across the market. The Trade Credit Insurance (TCI) guarantee will cover over £171 billion business activity currently insured and the transactions between around 13,000 suppliers and 650,000 buyers.

Tax relief measures

Temporary VAT reduction for hospitality sector: The Government has introduced a temporarily reduced VAT rate of 5%, down from 20%, for certain supplies of hospitality, hotel and holiday accommodation, and admissions to certain attractions. The reduction took effect on 15th July, and will last until 31 March 2021.

VAT Deferral: The Government has deferred VAT payment demands for the second quarter, meaning that no business will be required to pay outstanding VAT until the 30th of June. Businesses will have until the end of the year to reconcile any accumulated tax debts. The timeframe for repayment, originally until 31st March 2021, was extended on 21st September 2020 to March 2022. Businesses are now able to opt-in to pay their outstanding VAT in smaller amounts over this time. To opt in, businesses must submit outstanding VAT returns from the last four years, correct any errors on VAT returns before 31 December, and ensure they know how much they owe. In order to use the scheme, businesses must opt in before the end of March 2021.

Deferral of Self-Assessment Payment: Income tax payments due under Self-Assessment on 31st July 2020 have been deferred until 31st January 2021. All self-employed individuals will be eligible.

Support for Businesses Paying Tax: HMRC have established a dedicated COVID-19 helpline to support businesses and self-employed individuals unable to meet tax demands. Bespoke Time to Pay arrangements will be offered to those businesses with a legitimate need and support their recovery while navigating temporary financial challenges. HMRC will also waive late payment penalties and interest where a business experiences administrative difficulty due to COVID-19.

Targeted support measures

Apprentice and Trainee Bonus Scheme: The Government will provide financial incentives for employers to hire young employees, offering businesses a cash bonus of up to £2,000 per apprentice employed and £1000 per trainee taken on. This is in addition to the £1,000 employers already receive for hiring an apprentice, and applies to employers who hire a new apprentice between 1 August 2020 and 31 January 2021. The Government will make payments by Bacs on 14th working day of the month.

Local Restriction Support Grant: This grant is available for businesses that have been required to close for at least 3 weeks due to local lockdown restrictions. Businesses with a rateable value of under £51,000 will receive a cash grant of £1,000 for each 3-week period the business is closed, with those of a higher rateable value receiving £1,500 over the same period. Councils may also provide discretionary funding of up to £1,500 to businesses affected by Tier 3 restrictions. On 12th November, support was added for businesses specifically affected by national lockdown restrictions. Under this support, eligible businesses could be entitled to a cash grant from their local council for each 28 day period under national restrictions. On 5th January businesses required to close due to national restrictions imposed by the government could claim a one-off grant of up to £9,000 with firms of a rateable value of over £51,000 able to claim the full amount.

Cash Grant for Retail, Hospitality and Leisure under Local restrictions:: The government will provide funding to local authorities to provide cash grants of up to £2,100 per month, for businesses in the hospitality, accommodation and leisure sector adversely affected by regional restrictions. These grants are available retrospectively from August, and will be administered by local authorities.

Business Rates Holiday for Retail/Hospitality/Leisure venues: The government will provide funding to local authorities to provide cash grants of up to £2,100 per month, for businesses in the hospitality, accommodation and leisure sector adversely affected by regional restrictions. These grants are available retrospectively from August, and will be administered by local authorities.

Business Rate Holiday for Nurseries: Nurseries in England will not have to pay business rates for the 2020-21 tax year. This will apply to properties occupied by providers on the Government’s Early Years Register and are used for the provision of nursery education.

Non-financial measures

Business Support Checker Tool: The UK Government have released a new “support find tool” on the form of a self-assessed questionnaire for businesses and self-employed people across the UK, to allow them to quickly determine what financial support is available to them, to handle the consequences of the pandemic.

Coronavirus Business Support Hub: Businesses can now access a new online portal which aims to compile “key information for businesses including on funding and support, business closures, your responsibilities as an employer and managing your business during coronavirus. The hub also includes information for self-employed people and sole traders.”

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