Peter Noyce – Partner
DD: +44 (0)1483 758915
Commentators have suggested Rishi Sunak’s statement on Friday evening suspended Capitalism and whilst this probably was not the intention it certainly has suspended Darwinism.
And that was absolutely crucial, yes, we will pay higher taxes in the future to fund this measure but trust me the emotional, mental not just financial anguish for every, & I mean EVERY, business in the UK this has saved is massive.
So, the phrase furloughed workers is another addition to our vocabularies over recent weeks but those valued staff members that will end up in this bracket will just be relieved that the alternative has at present been averted.
The hope for the new economic measures
The hope is that this will give business, in an environment that all agree ‘Cash Is King’ and it’s my cash and I am not paying it to anybody else, the breathing space it needs. This was slowing up the flow of funds to such an extent that cashflow forecasts were impossible and meaningless. Add this to the fact that no one, banks and customers were geared up for or businesses wanting to be geared up by Coronavirus Business Interruption Loans meant that cash was going nowhere.
The finer details of the Coronavirus Job Retention Scheme, as this blog goes to press, are still to be announced. We hope this is announced soon as all businesses will want to know how this will work, along with staff and certainly those operating payrolls who will be absolutely desperate to receive the necessary system update (if even if that is possible).
I call on the banking institutions to work with their customers and release funds equal to the Coronavirus Job Retention Scheme grant if that customer is close to their facility limit; this will keep many in business in the short-term especially if they are also granted payment holidays on loan arrangements.
What next?
I see businesses making partitions of staff temporarily granted this leave of absence and retaining skeleton teams to keep the lights on so that everyone has a business to come back to when we as a country are through this.
Other elements still out there unanswered are:
- the effect on seasonal workers being those who were not paid in February which will apparently be the benchmark month with a Summer season that may not now start in any case;
- zero-hours contracts appear covered as they are under PAYE, so that is a relief;
- how those granted a leave of absence (furloughed workers) can still interact with the business if they are required, urgently needed at any point in time; and
- the self-employed.
In summary, Rishi Sunak’s announcement is brilliant, but the mechanics need to be in place at an incredible pace to continue easing the mental and financial strain on the country’s businesses, big and small.