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

COVID-19: Weekly UK Public Affairs Round-up

United Kingdom | 30th October 2020

COVID-19

This week, Nottinghamshire and West Yorkshire were moved into Tier 3 of coronavirus lockdown restrictions, while council’s start to use their powers to enforce bespoke measures in their regions. This comes as studies show rising cases across England and falling antibody prevalence in the population.

Increased confusion as more regions enter Tier 3

28th October: On Wednesday, the city, borough and district councils of Nottinghamshire released a joint statement outlining plans to move the region into Tier 3 of the Government’s Local Covid Alert Level system from today. Tier 3 measures will see the closure of many hospitality venues and restrictions on travel within and outside of the county. The region is expected to receive £23.1 million in funding to support businesses and manage the enforcement of restrictions.

29th October: On Thursday, the Government announced that the West Yorkshire Combined Authority, including the cities of Leeds and Bradford, will also be placed under Tier 3 restrictions from Monday 2nd November, with a financial support package of over £59.3 million. A joint statement from the leaders of West Yorkshire councils stated that they had accepted the region’s move into Tier 3 with “great reluctance”. Bradford currently has one of the highest infection rates in the country, with 483.5 cases per 100,000 of the population in the week of 24th October.

”Tier plus” confusion as local authorities take charge

As local authorities enforce lockdown measures in their regions, some have chosen to diverge from the Tier system laid out by central Government. In addition to Tier 3 measures, local leaders in Nottinghamshire have chosen to implement further restrictions, such as limitations on the sale of alcohol in shops after 9pm, in what they are terming “tier plus”. Furthermore, Bristol City Mayor Marvin Rees, has stated that the city has entered “Tier 1 plus” with additional actions being taken. The Government rejected calls from local council leaders in Oxford to move the city from Tier 1 to Tier 2, although the city has now been moved into High Alert following intensive discussions.

Since Mayor of Greater Manchester Andy Burnham resisted the Government’s enforcement of Tier 3 restrictions in the city earlier this month, local authorities have taken a more active role in shaping restrictions. Despite Downing Street’s denial of a new ‘plus’ system, local leaders continue to implement bespoke restrictions in their areas.

MPs request a roadmap out of lockdown for the North

However, as some local authorities are working to tighten restrictions in their localities, fifty Conservative MPs from the North of England have written to the Prime Minister urging the government to provide a clear road map out of lockdown restrictions. Concerns have been explicitly raised that, in imposing stricter conditions in the north to combat transimission rates, the Government was effectively abandoning its “levelling up” agenda in light of the cost of Covid-19, which could further inflict further economic hardship on Northern constituencies.

The levelling up agenda is a core component of the Conservative commitment to those economically disadvantaged regions, predominantly in Nothern England, that backed Brexit in the 2016 Referendum and, subsequently, helped to deliver the Conservative victory in the 2019 general election. Retaining these seats in former-Labour strongholds is central to the Prime Minister’s long-term electoral ambitions. Concerns among local Conservative MPs will therefore hold significant sway in Downing Street as it seeks to ensure that pandemic response measures remain effective while appearing equitable.

Christmas confusion

There has been further speculation this week around the restrictions the country can expect over Christmas. Environment Secretary George Eustice, said that it is “too early to say exactly what restrictions will be in place by Christmas” but noted that while families may be able to meet, this would be restricted to smaller gatherings. Furthermore, on Wednesday, senior police officers claimed that regional police forces would enforce coronavirus laws “as they see fit” over Christmas. Amongst this uncertainty, on Wednesday the Liberal Democrats emphasied the need for COVID-19 rules to be consistent across all four UK nations, due to the “inevitable” wave of travel which will occur over the Christmas period.

Latest studies question immunity and show rising rates

Immunity not looking hopeful

27th October: A study published by Imperial College London has shown that coronavirus antibody prevalence is falling in England. The research analysed finger-prick tests of over 365,000 people carried out at home between 20th June and 28th September. Scientists found that the number of people testing positive for antibodies dropped from 6% to 4.4%, with the largest decline among people aged 75 and above. The results of this study suggest immunity cannot be expected.

Rising rates in every region

29th October: A study conducted by Imperial College London and Ipsos MORI has shown that the COVID-19 infection rate has more than doubled since the last round of testing in late September, with 1.28% infected. The second round of tests showed that as of 25th October, 128 people per 10,000 of England’s population have COVID-19, compared to 60 per 10,000 as of 5th October. This equates to 96,000 new infections per day. Infections have increased across all areas of the country, however the North of England remains the worst affected.

Further data from the Office for National Statistics (ONS) also estimated that between 10th and 16th October, there were approximately 35,200 new coronavirus cases per day, with 433,300 people in England infected. Researchers echoed the Imperial College London study’s claim that the gap between the North and other regions is narrowing.

Despite England’s increasingly strict restrictions, the R rate does not appear to be slowing. In addition, rates are rising in all areas of England, which suggests that regions in the South of England may only be a couple of weeks away from moving into higher alert levels. Rising rates have coincided with England’s contact-tracing system experiencing its worst week thus far, with less than 60% of close contacts reached last week, while the turnaround time for tests rose to almost 48 hours.

Devolved Nations

  • 27th October: The latest figures from the Scottish Welfare Fund have shown that between April and June 2020, £5.2 million in crisis grants were awarded to people in need, a 77% increase when compared with figures for the previous year.
  • 28th October: The Welsh Government has updated its list of essential items that will be permitted for sale in Welsh supermarkets, following controversy and confusion over items deemed to be non-essential.

Other news

  • 29th October: In the latest alterations to the Government’s Travel Corridor List, from 4am on Sunday 1st November, arrivals from Cyprus and Lithuania will now be required to self -isolate.
  • 28th October: Government officials have asked local health chiefs to deploy 30-minute saliva kits in an acceleration of Boris Johnson’s ‘Operation Moonshot’ screening plan.
  • 12th October: The Government believes that a German vaccine backed by Pfizer could be ready for distribution by Christmas, with the first doses going to the elderly and the vulnerable.

Covid-19 Statistics

7 day-rolling average Peak (14th April) 22nd October 29th October
Confirmed Cases 5,195 21,242 23,065
Covid-19 deaths 943 189 280

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 29th October.

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.

Coronavirus Job Retention Scheme: From March, 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 % of the grant and employers 10%;
  • In October the taxpayer will contribute 60%, and employers the additional 20%.

The caps are proportional to the hours not worked, and only companies that have previously furloughed an employee for 3 consecutive weeks between 1 March and 30 June, and submitted their claim before 31 July are eligible to claim through the scheme. It has now been confirmed that the Scheme will close on 31st October 2020 to be replaced with the Job Support Scheme (see above).

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 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. 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.

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.

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: 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: 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 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: 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, 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. Applications to the Scheme will close after 30 November.

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.

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. 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.

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.

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.

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. These measures are currently being updated with revisions expected in early November.

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: A 100% business rates holiday will be applied from 1st April 2021 for 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.

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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