Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the effect on the income of small businesses of the decision to extend covid-19 restrictions beyond 21 June 2021.

Throughout the pandemic, the Government has sought to protect people’s jobs and livelihoods while also supporting businesses and public services across the UK.

The Government put in place an economic package of support totalling £352 billion through the furlough and self-employed income support schemes, support for businesses through grants and loans, business rates and VAT relief.

At the Budget, the Chancellor announced a generous extension of economic support to reflect the easing of restrictions and enable the private sector to bounce back as quickly as possible. As the Chancellor put it in his Budget speech: “we’re going long, extending our support well beyond the end of the Roadmap to accommodate even the most cautious view about the time it might take to exit the restrictions”.

Eligible businesses and employees across the United Kingdom are benefitting from the extension of the CJRS until the end of September, with employees receiving 80% of their salary for hours not worked, up to £2500 per month. From July, employers will contribute 10% of costs of unworked hours, followed by 20% in August and 20% in September. Many other countries have already done the same (Denmark, Netherlands, France, Spain), and economy-wide schemes have ended in Australia and New Zealand. Furthermore, the economy now is in a stronger position than it was last autumn, when businesses also contributed up to 20 per cent of wage costs. And lastly, the labour market is in a stronger position, with 5.5 million fewer people on furlough than in April 2020 and hiring intentions and job vacancy levels in June around 29 per cent above February 2020 levels.

Businesses that have legally remained closed or effectively cannot operate also recently benefitted from Restart Grants of up to £18,000 and can continue to benefit from the Governments £2 billion of discretionary grant funding for Local Authorities (LA) in England. Throughout the pandemic these businesses have also benefited from the £25 billion grant support that has been made available.

As restrictions have been lifted, it is right that we ask employers to contribute more to strike the balance between supporting the economy as it opens up, continuing to provide support and protect incomes, and ensuring incentives are in place to get people back to work.

The delay of Step 4 is accommodated by the continuation of the Government’s package of economic support, with CJRS, SEISS, business grants, business rates relief and loan programmes all extending into the autumn or beyond.