The UK Treasury has unveiled various unprecedented stimulus plans beginning 11 March 2020 till 16 July 2020, to combat the devastating impact on the British economy, as a result of the coronavirus pandemic.
It is noteworthy here that Rishi Sunak was appointed as the Chancellor of the Exchequer, on 13 February 2020 and has gained a lot of popularity by announcing these fiscal support measures to support the economy during the Covid times. He is being praised for being competent and likeable, and could be the country’s next Prime Ministerial candidate.
The schemes started being announced from the month of March 2020, starting with the budget. It was also the same month when the lockdown was imposed across Britain, which began on 23 March.
Let us take a closer look at the schemes announced by Sunak till now and the kind of impact they have generated so far.
Scheme: Business Rate Relief Scheme
Details
- Announced on 11 March 2020
- Provides for a 100 per cent business rates discount for retail, hospitality, and leisure venues between 1 April 2020 and 31 March 2021
- Applicable to all property occupiers in the retail, hospitality, and leisure industries
- There is no upper limit to the value of relief being extended
Impact
- The scheme is expected to cost the exchequer a sum of around £10 billion
Scheme: Coronavirus Job Retention Scheme
Details
- Announced on 17 March 2020
- Covers up to 80 per cent of the salary of an employee (with a cap of £2,500 per month) whose company is under stress and unable to pay the salary, due to Covid-19
- Pays wages from 1 March 2020 till 31 October 2020 for the furloughed staff, with businesses to start contributing from August 2020
Impact
- The scheme is expected to subsidise salaries with a total cost of roughly £10 billion every month from March to October 2020
- The scheme has saved 9.4 million jobs in the UK, which is close to 14 per cent of the UK’s population
Scheme: Covid-19 Corporate Financing Facility
- Announced on 17 March 2020
- Operated by Bank of England on UK Treasury’s behalf
- Provides at least a 12 months’ loan support to help companies who are significant contributors to the UK economy, undergoing cash flow disruption
- To be eligible, a company should have an investment grade rating, or a financial health equivalent to such a rating
Impact
- A total of £43 billion worth of business loans have been provided across the United Kingdom under various loan schemes of the government
Scheme: VAT Deferral Scheme
Details
- Announced on 20 March 2020
- VAT payments due between 20 March 2020 and 31 June 2020 can be deferred and must be fully paid by 31 March 2021
- No interest or penalties to be charged on deferred VAT payments
- Beginning 1 July 2020, VAT continues to be accounted for in the usual way, with no further extension
Impact
- The deferred VAT payments between 20 March 2020 and 31 June 2020 will add up to a value of £30 billion
Scheme: Self-Employed Income Support Scheme
Details
- Announced on 26 March 2020
- Is applicable to self-employed workers with profits of up to £50,000
- Provides grant worth 80 per cent of monthly profits (up to £2,500/ month) for the Covid-19 affected self-employed
- Applicable from March to October 2020
Impact
- The scheme is expected to provide income relief to a maximum of 3.5 million self-employed people in the UK
Scheme: Coronavirus Business Interruption Loan Scheme
Details
- Announced on 2 April 2020
- Provides financial aid to small businesses across Britain (with a turnover of up to £45 million), who are struggling to survive as a result of the coronavirus outbreak
- More than 90 lenders will be working towards providing finance to SMEs under the scheme
- Each SME can apply for a loan up to £5 million in the form of term loans, overdrafts, invoice finance, and asset finance. This scheme provides a government-backed guarantee for the loan paybacks
Impact
- The scheme costed the exchequer more than £11 billion by 30 June 2020, approving 52,275 SME loans
Scheme: Coronavirus Large Business Interruption Loan Scheme
Details
- Announced on 3 April 2020, to support large businesses with a turnover of more than £45 million
- Provides for government backed loans up to £200 million at commercial interest rates, and with a term of up to three years
- Applicable to all businesses except banks and building societies, insurers and reinsurers, and public-sector organisations
Impact
- 359 businesses were provided with total loans worth more than £2.33 billion by 30 June 2020
Scheme: Bounce Back Loan Scheme
Details
- Announced on 27 April 2020
- A fully government backed loan scheme for small companies, to get a debt worth less than £50,000, which is up to up to 25 per cent of its turnover
- Loan term is allowed up to a period of 6 years
Impact
- Loans provided to 967,321 small businesses worth £29.51 billion up to 30 June 2020
Scheme: Temporary VAT cut for hospitality and tourism
Details
- Announced on 8 July 2020
- VAT rate will be lowered to 5 per cent (from existing rate of 20 per cent) for restaurants, pubs, bars, cafes, hotels, holiday accommodations, and tourist attractions.
- Applicable from 15 July 2020 to 12 January 2021
Impact
- This move is expected to cost £4 billion to the government.
- It will protect close to 2.4 million jobs in the hospitality and tourism sector
Scheme: Stamp Duty Land Tax 'holiday'
Details
- Announced on 8 July 2020
- Stamp duty rates have been lowered for the purchase of homes costing less than £500,000 between 8 July 2020 and 31 March 2021
- Exemption applicable to both individual and corporate buyers, and for first time as well as well second time home buyers
Impact
- The move is expected to raise the demand for housing in the UK
Also Read: Bonanza for the Hospitality & Housebuilding Sector in Chancellor’s Summer Statement
Scheme: Kickstart Scheme
Details
- Announced on 8 July 2020
- Will pay to businesses to create new jobs for young people in the age group of 16 to 24 years
- Businesses will provide them with a six-month placement from August 2020 to January 2021
Impact
- The scheme has a budget of £2.1 billion
Scheme: Job Retention Bonus
Details
- Announced on 8 July 2020
- Will pay a £1,000 grant to employers for every furloughed employee who is retained from 31 October 2020 and continues to be employed till 31 January 2021, with a minimum monthly salary of £520
Impact
- The scheme would replace the popular Coronavirus Job Retention Scheme, popularly known as the furlough scheme in the UK
- The scheme intends to distribute a maximum of £9.4 billion to workers (£1000 per furloughed employee), beginning February 2021
Also read: Sunak Announces Mini Budget 2020; Special Focus Given To Employment Generation
Finally, the UK government is faced with two main challenges in these uncertain corona pandemic times – one a lack of jobs, and two, a lack of consumer demand across most goods and services. Some sectors like retail are still looking for some big-ticket relief measures to sustain themselves during this tough crisis. Something also probably needs to be done to ease the supply side constraints and get the economic production up, closer to pre-corona level. Therefore, the Treasury’s job is not over, and it may have to announce yet another series of schemes during its autumn budget, to support dwindling jobs and stop businesses going in the red.
