Whilst the package of financial measures so far announced by Chancellor Rishi Sunak to combat the effects of COVID-19 have been largely welcomed by Camborne Business Improvement District (BID), the directorial team have raised concerns on a number of issues with local MP George Eustice.
BID manager Anna Pascoe coordinated the response in an email to Eustice, who is now Secretary of State for Environment, Food and Rural Affairs.
This scheme requires businesses not only to go through the hassle of applying to their own bank first, but requires them to be declined by their own bank, and then if/when they are accepted by the British Business Bank, after the interest-free period, the loan interest rate is 12%. This means that desperate businesses may accept higher rates from their own bank as they have no alternative (or even if the rate is lower than 12%, at a time when the base rate is about to become negative, where is the regulatory oversight to ensure this is not a profit bonanza for banks and fair rates must be charged?) Those who are declined will face the choice between phenomenal debt or closing permanently when they might have otherwise reopened.
Licensed/leisure premises infrastructure
I am aware that for many licensed premises, the 20% wage bill of furloughed staff, plus other overheads that are likely to be deferred rather than waived (such as HMRC, utility and rent bills) will amount to substantial monthly costs. These business owners will not have sufficient reserves to cover these outgoings. What provisions are being considered for these businesses to ensure they can reopen and protect jobs? Additionally, I am aware that most breweries have halted production and taken enormous bridging loans since the outbreak began. What macro level support is being considered to ensure breweries that would normally have been going concerns, remain such beyond this crisis?
Businesses not covered by current reliefs
There are two main parts to this – businesses without physical premises, who therefore don’t classify for the reliefs announced so far, but anticipate, or already have cashflow issues due to income now being in jeopardy. The other aspect is businesses for whom an adverse financial impact is clearly on the horizon but is not yet live. This primarily affects entrepreneurs and start-ups (a sizeable percentage of Cornish businesses) who typically complete work and invoice afterwards and rely on a combination of regular contract and ad hoc work. At present these businesses are unable to furlough staff as they need them in order to complete work already commissioned, but are incurring costs in the knowledge that their invoices may not be paid. An announcement from the Chancellor for these kinds of businesses to future proof their existence would be most welcome.
It would also be interesting to learn your thoughts on a “debt jubilee”. This idea has been gaining momentum amongst financial commentators and would do something like credit every adult worker’s bank account with £10,000, which would either level the playing field of CV19-induced financial problems, and/or give people some left over to spend and get the economy moving again. Whether it is this specific option or something like increasing the personal threshold to £20k, which would both incentivise return to work and spending and cut out the stress and inefficiency of applying for reliefs, thereby easing pressure on HMRC’s helpline. There’s also the option to call for all Time to Pay reliefs to be automatic for businesses forced to close as it seems a waste of time for individual businesses and HMRC to go through the charade of evidencing hardship in this situation.
Finally, I am aware that some people are not taking the Government’s mandates as seriously as they should and are using the excuse to leave home and buy food as a daily bonus to top up and get out and about, in addition to the daily exercise permission. Our position at Camborne BID is that the sooner everyone keeps their doors closed, the sooner we can start opening them again and it would be appreciated if future Government announcements could emphasise that leaving home to buy wants rather than needs is directly contributing to prolonging the outbreak.
Once a reply on the above points is received, Anna will summarise the salient points and update BID members.
This is a fast-moving and very distressing situation for many local businesses who are suddenly up against immediate financial challenges few of us could have imagined,” she said. “The Chancellor’s announcements have brought some comfort but there are gaps and more help is needed urgently. We represent Camborne but the issues we have asked him to address are relevant to everyone who lives and works in Cornwall.