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

COVID-19: Weekly UK Public Affairs Round-up

United Kingdom | 13th August 2020

COVID-19

As the UK officially enters the largest recession on record, the Government has made the full return of schools in September a national priority. Elsewhere, arrivals from France will be amongst those once again required to quarantine as infection rates continue to rise across Europe, while the Government revises the NHS Test and Trace system to attempt to avoid a rise in COVID-19 cases at home.

School reopening a “national priority"

7th August: The Government released new guidelines for schools last Friday as it seeks to ensure that all schools can return in full in September. This was followed by the Prime Minister’s reaffirmation this week that “education is the priority for the country and that is simple social justice”, indicating that in the case of a second wave of COVID-19, schools would be the last to shut.

This follows the July 31st press conference when Chief Medical Officer Chris Whitty explained that the UK has “probably reached the limit of opening up society” and will only be able to reopen schools in September by trading some existing freedoms, that may include pubs and restaurants. Despite this, there is differing scientific thought on whether children transmit the disease. While evidence earlier in the week appeared to show that children do not spread the virus, a Public Health England report has suggested that older children do spread the disease like adults.

Elsewhere, A-level students in England received their results on Thursday, despite heavy criticism over the system by which grades have been apportioned. Education Secretary Gavin Williamson had sought to pre-empt criticism by announcing a “triple-lock” by which students could appeal their grades based on their mock examination results. 40% of grades in England have been adjusted down through the moderation system, although the proportion of students achieving A*/A grades overall has increased. The move is thought to be an attempt to avoid the U-turn by the Scottish government this week, which revised over 100,000 exams grades following criticism of “classist” and arbitrary downgrades. 75,000 students are thought to have their results positively affected by the decision.

France among countries added to travel quarantine list

13th August: Transport Secretary Grant Schapps announced that from 14th August arrivals from France, Malta and the Netherlands will be required to quarantine for 14 days, as well as arrivals from Monaco and the Caribbean islands of Aruba and Turks and Caicos. This follows an uptick in COVID-19 cases in all locations. It is thought that up to 500,000 British citizens are currently on holiday in France. The French authorities are threatening a reciprocal arrangement for British arrivals to France in coming days. Conversely, the Government has announced that Brunei and Malaysia have been added to the list of travel corridors.

UK records deepest recession on record

12th August: New figures Office for National Statistics (ONS) reveal that the UK economy experienced the largest recorded economic slump between April and June 2020, as the UK enters recession for the first time in 11 years. Between April and June the economy shrank 20.4% compared to Q1 2020, although the economy began to bounce back in June as restriction measures were eased. Futhermore, ONS employment figures show that the number of people in work fell by 220,000 over the same period, the largest drop since 2009.

The Chancellor Rishi Sunak stated that these figures show that “hard times are here”, and noted that “tough decisions lie ahead for all of us.”

There is some debate as to whether the recession, the largest in the G7, is particularly due to the UK’s large service sector, or the nature of the nation’s lockdown.

Theatres and music venues to reopen in England

14th August: From 15th August, music venues and theatres will be allowed to reopen along government guidelines. The government will also resume plans to pilot social distancing in sports venues. Wedding receptions for up to 30 guests will be permitted, subject to social distancing restrictions.

These relaxation measures were delayed by a fortnight on 1st August, when the Prime Minister used a press conference to announce a “squeezing of the brakes” on the plans. This was due to a rise of COVID-19 cases in parts of the UK, on the continent, and fears of a second wave in the second part of the year. The further easing of restrictions come as the Government announces the introduction of stricter fines for those that host large gatherings and illegal raves, or repeatedly flout rules on face coverings. The maximum penalty is now £3,200.

NHS Test and Trace to divert resources to local councils

10th August: The Government has announced that the NHS Test and Trace will decentralise its systems and refocus its efforts to a local level. The reorganisation will see a cut of 6,000 contact tracers from centralised call centres and a reallocation to local councils. In order to get ‘boots on the ground’, NHS Test and Trace will provide local authorities with a dedicated team of contact tracers for local areas, who will knock on the doors of people who fail to respond to contact tracing calls. The move follows the successful use of the approach by councils in Blackburn with Darwen, Luton and Leicester.

UK death toll re-evaluated down by over 5,000

12th August: Following a review into COVID-19 death statistics, Public Health England has announced that it will move in line with the rest of the UK in reporting coronavirus deaths as those that have occurred within 28 days of a positive test. As a result of this change in methodology, the UK death toll has fallen by 5,377 to 41,598, a reduction of 12%. Deaths in July were in fact 75% lower than had been previously recorded.

Devolved Nations

  • 13th August: Northern Ireland’s schools have been issued with revised guidance for reopening with “relaxed” social distancing rules and optional face coverings in classrooms..
  • 10th August: Gyms, swimming pools, leisure centres and play centres reopened in Wales on Monday as lockdown restrictions continue to be eased. Councils have been given extra powers to enforce COVID-19 legal requirements.
  • 12th August: Children in Scotland began returning to school this week, however a secondary school in Glasgow has been linked with a COVID-19 cluster in the city.
  • 12th August: Following an outbreak in Aberdeen, measures have been taken to close indoor and outdoor hospitality in the Aberdeen City local authority area.

Other news

  • 7th August: The Government has announced that Preston has been added to the areas covered by the local lockdown restrictions in the north west of England. Individuals are not permitted to meet others in their homes.
  • 10th August: The Treasury announced that diners used the “eat out to help out” scheme more than 10.5 million times in its first week. The Treasury estimates that the average claim is close to £5, making the cost of the policy around £50 million so far.

Covid-19 Statistics

7 day-rolling average Peak (14th April) 6th August 12th August
Confirmed Cases 5,195 950 1009
Covid-19 deaths 943 49 18

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 13th August.

Starting in March, 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, and the restrictions on business activity as a result. Some of these have been revised and extended since being announced, most recently following the Chancellor of the Exchequer’s speech to the House of Commons on 8th July.

An official web portal with details on eligibility and how businesses can apply for support remains open by the Government.

Employment retention measures

Coronavirus Job Retention Scheme: Employers can 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 can be made to cover the period 1st March – 31st October 2020. From August, furloughed workers will be able to work part-time, with employers sharing salary costs with the Government. Amendments to the scheme announced on 29 May include the following: From August, employers will begin paying National Insurance and pension contributions and the taxpayer contribution will remain at 80 per cent; By September, employers will be expected to begin paying towards wages, with taxpayers contributing 70 per cent of the grant and employers 10 per cent; Throughout October taxpayers will contribute 60 per cent and employers the remaining 20 per cent. 31 July is the last day that you can submit claims for periods ending on or before 30 June. The current Coronavirus Job Retention Scheme will end in October.

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.

Coronavirus Job Retention Scheme: Employers can 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 can be made to cover the period 1st March – 31st October 2020. From August, furloughed workers will be able to work part-time, with employers sharing UK Business Support Measures salary costs with the Government. Amendments to the scheme announced on 29 May include the following: From August, employers will begin paying National Insurance and pension contributions and the taxpayer contribution will remain at 80 per cent; By September, employers will be expected to begin paying towards wages, with taxpayers contributing 70 per cent of the grant and employers 10 per cent; Throughout October taxpayers will contribute 60 per cent and employers the remaining 20 per cent. 31 July is the last day that you can submit claims for periods ending on or before 30 June.

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. The online service for reclaiming coronavirus sick-pay scheme is now live, with HMRC guidance on eligibility found here.

Self-employed Income Support Scheme: Most self-employed workers will qualify for a grant of up to 80% of average monthly profits, capped at a maximum of £7,500 per month and covering three months’ earnings. The scheme will be 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 claimants’ income must come from self-employment, and they must be trading when an application is made, or would be except for COVID-19 disruption. Applications opened on 13 May 2020 and a final funding payment is accessible on 17 August 2020.

Business disruption financing measures

Coronavirus Commercial Financing Facility: 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: 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. Over the next 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: 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 using the existing Enterprise Finance Guarantee. Lenders will be one of 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.

Coronavirus Business Interruption Loan Scheme: 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, determined using the existing Enterprise Finance Guarantee. Lenders will be one of 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.

Bounce Back Loan Scheme: 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 25% of that figure. The Government will act a guarantor for 100% of the loan, increasing the chance of acceptance and ensuring the loan doesn't need to be secured against personal assets. The Government will pay interest for the first year, with no repayments will be due during those 12 months.

Small Business Grant Funding: Individual grants of £10,000 will be made available through local authorities to businesses eligible for Small Business Rate Relief (SBRR) that already pay little or no business rates.

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 will be introduced from 15th July, and last until 12 January 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. Any deferred VAT payments should be paid on or before 31st March 2021.

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

Temporary Changes to the Statutory Residence Test: For the period between 1st March and 1st June 2020, any period spent in the UK by individuals working on COVID-19 related activities will not count towards residence tests that potentially bring global earnings within the purview of UK taxation. These changes are designed to allow skilled individuals to come to the UK and help respond to the pandemic. The guidance has not been updated since April.

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

Eat Out to Help Out Scheme: The Government will support the restaurant industry by offering a subsidized 50% discount on eat-in food and non-alcoholic drink bills for customers eating between Monday and Wednesday during August, up to a £10 limit. Money will then be claimed back by the restaurant from the Government. Applicants are eligible if they sell food for immediate consumption on the premises; provide an own dining area or share a dining area with another establishment for eat-in meals; and were registered as a food business with the relevant local authority on or before 7 July. Those eligible can register for the scheme from 13 July 2020, and registration closes on 31 August.

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. Further details will be announced in due course.

Future Fund: Targeted at fledgling UK businesses backed by private equity that have suffered from COVID-related disruption, the future fund will provide a convertible loan facility of £125,000 - £5m. To qualify, the company must have raised at least £250,000 in equity investment from third party investors in the last 5 years. The loan must be matched by new third-party investment and be used for working capital. Term length is for a maximum of 3 years, after which any outstanding debt will be converted into stock. The company must have half or more of its employees based in the UK or generate at least half of their revenue through UK sales. The scheme was launched on 20 May and will be open for applications until the end of September 2020.

Innovate UK Investment Fund: A £750 million fund for targeted support for R&D-focused small businesses is being made available through Innovate UK’s grants and loan scheme. The majority of the money has been allocated to support existing Innovate UK customers on an opt-in basis. However, grants or loans of up to £175,000 will be provided to approximately 1,200 businesses not currently in receipt of Innovate UK funding, provided they otherwise meet the criteria for Innovate funding. The first payments will be made by mid-May.

Cash Grant for Retail, Hospitality and Leisure: A cash grant of up to £25,000 will be made available to businesses in England operating in the retail, hospitality and leisure sectors with a rateable value of between £15,000 and £51,000. Businesses in these sectors with a rateable value of under £15,000 will receive a grant of £10,000.

Business Rates Holiday for Retail/Hospitality/Leisure venues: A 100% business rates holiday will be applied from 1st April for a period of one year to all retail, hospitality and leisure venues, including shops, pubs, restaurants and theaters. There is no limit to rateable values.

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.

Support Package for Charities: Frontline charities across the UK will benefit from a £750 million package of Government support to ensure they can continue their work during the coronavirus outbreak. The government has also confirmed that charities can access many of the measures announced to support businesses more broadly.

Reopening High Streets Safely Fund: Councils across England will receive access to a new £50 million fund to allow Local Authorities to help support practical and health & safety measures designed to facilitate the quick and safe reopening of non-essential high street and retail spaces in the near future. Councils will also be able to use this money to develop local marketing campaigns to explain the changes to the public and reassure them that their high streets and other commercial areas are safe.

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.

Extension Period on Filing Accounts: Businesses can apply for an additional three months to file accounts with Companies House to help avoid penalties as they deal with the impact of COVID-19. Applications can be made through a fast-track online system.

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.”

Business Interruption Insurance: The Government has confirmed that the business impact of Government measures to slow the spread of the COVID-19 virus provides sufficient grounds for businesses to claim on their insurance where they have appropriate business interruption cover in place.

Workplace Skills Learning Platform: The Government has introduced a new online platform that gives people access to free, high-quality digital and numeracy courses to help build up their skills, progress in work and boost their job prospects. The platform provides individuals with free access to several courses designed to boost workplace skills as individuals continue to socially distance at home.

Protection for commercial tenants: The Government has introduced temporary measures to safeguard commercial tenants from aggressive debt recovery actions. Statutory demands and winding up petitions issued to commercial tenants have been temporarily voided and new protections introduced in the use of Commercial Rent Arrears Recovery. Landlords have been asked to work collaboratively with businesses unable to meet rent demands.

Flexible Insolvency rules: Changes will include allowing businesses undergoing restructuring to continue trading and receive supplies. There will also be a temporary suspension of wrongful trading provisions for company directors to remove the threat of personal liability, which will apply retrospectively from 1st March.

Gender Pay Gap Reporting Suspension: The Government Equalities Office has suspended requirement for businesses to report gender pay gap data for the reporting year 2019/20.


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