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UK unveils Sh41 trillion coronavirus bailout

By Mirror | March 18th 2020 at 09:11:57 GMT +0300

The United Kingdom government has announced a vast bailout of thousands of businesses hit by the coronavirus pandemic.

Stricken firms will be offered Sh41 trillion (£330 billion)  loans, zero business rates and £25,000 in cash grants for small businesses.

And homeowners will be offered a three-month mortgage payment holiday by their lender if they need it.

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It comes after Boris Johnson last night told people not to go to pubs, clubs and restaurants to stop the spread of COVID-19 - prompting warnings of an economic meltdown.

Prime Minister Boris Johnson said: "We will act like any wartime government and do whatever it takes to support our economy."

Announcing the measures at a No10 press conference, he added: "This enemy can be deadly - but it is also beatable."

Chancellor Rishi Sunak described the interventions in the economy as "a scale almost unimaginable a few weeks ago". The Tory said: "This is not a time for ideology and orthodoxy. This is time to be bold. For courage."

But unions said the measures must go further to help the lowest earners and not be a "bailout for boardrooms" alone.

Labour leader Jeremy Corbyn added: "The government has announced a mortgage holiday for homeowners but it must suspend rents too.

"Millions of people rent in the UK. Suspend rents. Ban evictions. Now."

Mr Sunak said that measures would be announced in the "coming days" to help protect people who rent.

He said: "The biggest fixed costs that many families face will be their rent payment and it is right that we have regard to that.

"What I can tell him (Mr McDonnell) is that the Housing Secretary (Robert Jenrick) will in the comings days be making a statement with further measures to protect renters through these difficult times."

And Labour leadership candidate Sir Keir Starmer said: "The Government has finally recognised this is an economic crisis, but it is obvious the measures announced by the Chancellor don’t go far enough.

"There is no support for millions of renters, no new money for social care or the elderly.

"There is no clarity on employment support and no new money for already stretched public services."

Here is a summary of the measures announced and what they mean.

Mortgage holders will be offered a three month payment holiday

Mortgage lenders have voluntarily agreed to help customers who have "issues with their finances as a result of Covid-19".

Those measures will include a three-month payment holiday.

We have asked the Treasury for more detail on this - including whether all lenders are taking part; whether it includes buy-to-let or interest-only mortgages; or whether the holiday will affect people's credit score.

The Chancellor said: "For those in difficulty due to coronavirus, mortgage lenders will now offer a three month mortgage holiday.

"So people will not have to pay a penny towards their mortgage costs while they get back on their feet.”

But there's no specific support for renters

Today's announcement had no specific support for renters.

In France, rent payments and utility bills have been suspended. These measures have not been announced in the UK.

Businesses will get £330bn in loans - and it could be more

The biggest announcement was a £330bn offer of loans to businesses large and small to cope with the short-term crisis.

Chancellor Rishi Sunak said: “That means any business who needs access to cash to pay their rent, salaries, suppliers, or purchase stock will be able to access a government loan on credit on attractive terms.”

If demand is greater than that, he said, he will go further and “provide as much capacity as required”. A new legal power will be taken to “offer whatever further financial support is necessary” in the future.

The £330bn of loans will be provided in two ways, the Chancellor said.

For big firms, there will be a new lending facility arranged through the governor of the Bank of England.

For smaller firms, a new business interruption loan scheme - which was announced at last week’s Budget to deal with coronavirus - will be extended from £1.2m to £5m per firm.

No interest will be due on those loans for smaller firms for the first six months.

“Both of these schemes will be up and running by the start of next week,” he said. 

Small pubs, restaurants and entertainment venues will be able to get £25,000 cash loans - IF they don't have insurance

The government announced a huge scheme of £25,000 cash grants for “pubs, clubs, theatres and other hospitality, leisure and retail firms”.

The Chancellor had already said business rates won’t apply this year to retail, hospitality and leisure venues with a “rateable value” between £15,000 and £51,000.

Now those same firms - basically, small businesses in the sector - will be also be offered an additional cash grant of up to £25,000 per firm.

However, Chancellor Rishi Sunak claimed his new funding won’t be needed for firms that have specific insurance against pandemics - despite firms warning they may be unable to claim.

The Chancellor said: “For those businesses that do have a policy for insurance that covers pandemics, the governments action is sufficient and will allow businesses to make an insurance claim against their policy.”

No shops, pubs, theatres, music venues or restaurants will be charged business rates this year

The business rates holiday this year for smaller firms (see above) will now be extended to all firms in the retail, hospitality or leisure sectors - regardless of their value.

“That means every single shop, pub, theatre, music venue, restaurant, and any other business in the retail, hospitality or leisure sector will pay no business rates whatsoever for 12 months,” the Chancellor said. 

£3k support packages for many small firms will be upped to £10k

Last week’s Budget announced support to 700,000 small firms which are eligible for either Small Business or Rural Rate Relief.

It was worth £3,000 per firm but will now be worth £10,000, the Chancellor said.

Pubs and restaurants will be able to offer takeaways without planning permission

The Treasury said: "We will relax planning regulations to allow pubs and restaurants to start providing takeaways without a planning application."

Some enterprising restaurants have already converted into hastily-arranged takeaway restaurants after they failed to get people through the door.

The relaxation will happen "to support the food industry and help provide meals for people who need to self-isolate."

A package for airlines and airports could be announced soon

The Chancellor and Transport Secretary will discuss in the coming days specific support for airlines and airports.

Extra measures for individual employees could be announced soon

Chancellor Rishi Sunak said he would also work “urgently” on new forms of employment support, but announced no new measures today.

He said: “In the coming days I will go much further to support people’s financial security.

“In particular I will work with trade unions and business groups to urgently develop new forms of employment support to help protect people’s jobs and their incomes through this period.”

But unions say it must go further

UNISON general secretary Dave Prentis called for Statutory Sick Pay worth £94 a week to be raised to the same rate as the minimum wage.

He said: “Unions want to work with ministers in the interests of the country at this unprecedented time.

“But making sure that all workers off ill with the virus or isolated at home have enough money to pay their rent and bills is essential."

TUC General Secretary?Frances O’Grady ?added:?? "The Chancellor is right to provide this emergency support for business. But it must be conditional on employers protecting jobs and livelihoods, as is the case in countries like Sweden and Denmark.

“This can’t be just a bailout for boardrooms – it has to be about putting money in workers’ pockets too."


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