Europe Fintech Weekend read

What Support Can Businesses Claim from the UK Government Covid-19 Support Package?

Earlier in January the UK government announced that England would be placed in a third national lockdown, following the measures already in place in Wales and Scotland. All non-essential businesses have now been forced to close, with guidance not expected to be lifted until February half-term at the earliest.

Alongside this announcement, Chancellor Rishi Sunak put forward a £4.6 billion package of grants to support businesses in the retail, hospitality and leisure sectors to help support businesses and secure jobs.

Companies will be able to access a one-off “top-up” grant for up to £9000 per property, expected to benefit over 600,000 business properties. A further £594 million in discretionary funds has been made available to local authorities and devolved administrations to support other impacted businesses not eligible for these grants.

Chancellor Sunak said: “Throughout the pandemic we’ve taken swift action to protect lives and livelihoods and today we’re announcing a further cash injection to support businesses and jobs until the Spring. This will help businesses to get through the months ahead – and crucially it will help sustain jobs, so workers can be ready to return when they are able to reopen.”

On the whole the support has been gratefully received, as many businesses, particularly SMEs, were concerned about their chances of making it through to the otherside of the pandemic.

Simon Cureton, CEO of the business finance marketplace Funding Options, said: “We welcome the Chancellor’s decision to provide an immediate cash injection for businesses affected by this third national lockdown. It is a crucial intervention, given that in September almost a fifth of SMEs in the UK admitted they would not survive another lockdown and will provide a safety net for businesses that could have seen the announcement as a fatal blow.

“The government needs to consider a medium-term, sustainable solution for struggling SMEs. An ad-hoc drip-feeding of funds risks businesses falling over the proverbial edge once government support comes to an end.

“As the government considers how to support SMEs in accessing vital funding efficiently and securely, it’s essential that decisions are driven by a determination to boost market-based lending and harnessing the collective capabilities of the alternative finance providers. The Government needs to build closer ties with the agile, tech & data-driven fintechs that are revolutionising the SME finance sector and providing innovative solutions that will be pivotal to steering UK businesses out of this difficult chapter in 2021.”

However, not all are enthusiastic about the grant announcement, as there are concerns that it will not be enough to save businesses who have already been through months of financial instability.

“Whilst news that more Government funding will be available to support businesses through the UK’s 3rd national lockdown is welcome, it simply isn’t sustainable – especially in the long term,” said Ronnie Wilson, Group Executive Vice President of Serviceware, providers of a portfolio of solutions for digitising and automating service processes. “Financial support will inevitably come to an end and with the UK officially being in recession for the first time in 11 years, and Europe facing a deeper-than-expected downturn, tough times and further uncertainty lay ahead.

“At a time when the c-suite desperately needs to cut costs, whilst also freeing up budget to reinvest in growth, it’s imperative that they gain a transparent view of costs vs business value generated. For many businesses, an integrated, high-performance and, above all, flexible solution is needed to create a holistic overview of business spend, on which decisions (about cost, process, operations and more) can be based. Businesses that maintain an end-to-end view across their entire IT portfolio will be able to take back control of their running costs and streamline their budgets towards funding growth.”

The government has also recently announced an expansion of its Dormant Assets Scheme to include the pensions, investments, insurance, wealth management and security sectors, making an additional £880m available to support communities across the UK.

The Dormant Assets Scheme was created with the aim of reuniting people with their financial assets, such as a bank account, that have not been used in a number of years. Over £745 million has already been distributed from dormant bank and building society accounts, and where the money cannot be reunited with its owners, it is instead given to support social and environmental initiatives.

Duncan Stevens, Chief Executive of Gretel, the free online hub that helps people reconnect with lost and dormant accounts, said: “It is good to see that the scheme will be expanded to allow for additional dormant assets, meaning billions more could be utilised for great causes across the UK.

“We estimate that 19.6 million people in the UK have become disconnected from financial services products and are sitting on dormant or unclaimed money with a collective value of over £50 billion. While banks, pensions companies and investment firms have an obligation to reunite customers with their lost money it is seen as a difficult and complicated process.

“At the heart of Gretel is the belief that all consumers are entitled to receive all the money due to them and should not have to pay to get their own money back, nor face numerous complex barriers to access it. A lot of dormant assets will belong to vulnerable customers including those considered elderly, infirm or mentally or physically incapacitated. Yet, because of Covid-19, more people can be classed as vulnerable due to illness or redundancy today, and there is a risk they are being disadvantaged by the lack of access to these dormant accounts as existing search services do not necessarily cater for these types of customers.”

Finally, the government have also outlined proposals to increase the financial eligibility criteria for debt relief orders, helping more people deal with financial difficulties and “problem debt” to get a fresh start.

Research shows that the demand for debt advice could increase by up to 60% by the end of 2021 and around 3 million more people than before the pandemic will need support with problem debt by the end of 2021.

Business Secretary Kwasi Kwarteng said: “Suffering from financial difficulties places a huge amount of stress on people’s mental health and wellbeing, which is why we are committed to giving more people who are struggling with debt a chance for a fresh start.

“Debt Relief Orders are a valuable tool for supporting vulnerable people to get to grips with their problem debts. Our plans to increase the eligibility criteria will mean many thousands more could benefit from this help.”

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