6. Measures in other sectors
6.1 Measures in other sectors
Many MEASURES IN OTHER SECTORS beyond the immediate scope of the health system are being taken to prevent further spread of the virus. This section contains information on many of these areas, including border and travel restrictions and economic and fiscal measures, among others.
Update 25th September 2020
The government has announced that the current furlough scheme ending on 31st October 2020 will be replaced by a new Jobs Support Scheme, which will run for six months from 1st November (https://www.gov.uk/government/publications/job-support-scheme). To qualify, employees must work one-third of their normal hours. Employers will pay employees for hours worked, with the government and employer each paying the remaining one-third of wages. Workers will therefore continue to receive 77% of their salary. The government contribution is capped at £697.92 per month. While the extension to the scheme has been welcomed, there are concerns it does not go far enough in incentivising employers to retain employees (https://www.bbc.co.uk/news/business-54280966).
A grant extension for the self-employed has also been launched (https://www.gov.uk/government/publications/self-employment-income-support-scheme-grant-extension/self-employment-income-support-scheme-grant-extension). This will provide two grants between November 2020 to April 2020, which will cover 20 per cent of average monthly trading profits. The grants will be capped at £1,875 in total.
Additionally, businesses that took out loans under other COVID-19 schemes will now be able to pay them back over 10 years rather than the original six. A previously implemented VAT cut from 20% to 5% for hospitality and tourism companies has been extended to March.
Update 23rd September 2020
The Institute for Government has released a report estimating the economic impact of COVID-19 on the UK’s public finances. The report concluded that the “effective ‘cost of Covid’” in terms of it’s impact on public borrowing will be £317.4bn in 2020/21. Most of this additional increase in public borrowing (£192.3bn) is due to government measures to protect businesses and households from the economic consequences of the crisis. According to the estimates, the government has absorbed almost two-thirds of the economic hit to the private sector. The report also suggests that reduced tax revenues due to a fall in output and higher welfare spending will increase planned government borrowing by £125bn, while the COVID-19 response will see government departments spend 19% (or £76.3bn) more than allocated budgets this financial year. The full report can be viewed here: https://www.instituteforgovernment.org.uk/sites/default/files/publications/cost-of-covid19.pdf
Update 1st September 2020
Schools are due to return on 1st September and despite making plans for several months, new guidance was published just days before opening, leading to criticisms across the sector that this did not enable sufficient time to implement changes. The new guidance stipulates that an entire year group will now need to isolate if a single pupil tests positive, which will be much more disruptive for working parents and for schools to manage. Older pupils will be allowed to sit fewer GCSE’s and class sizes will be reduced. Primary-level maths and English will also be re-taught when new pupils arrive in September.
Update 14th July 2020
Local authorities have been given additional funding to distribute as food vouchers to those in need, as well as an additional £50 million to support the reopening of high streets including for communication with the public and business-facing awareness.
On the 8th July, the Chancellor announced the UK mini budget, which included an ‘Eat Out to Help Out’ campaign, aimed at protecting jobs and encouraging people to eat out again. The programme offers diners a 50% discount on the first £10 of any meal out in and throughout August. The Chancellor described a 25% contraction in the economy, to which he added that this was the amount the economy had grown by in 18 years. With that, Chancellor Sunak announced that the furlough scheme, which is ending in October, will be replaced by a scheme to incentivise employers to continue to employ staff for at least 3 months with a one-off payment of £1,000. Some critics from the Federation of Small Businesses have questioned whether this will be implemented in a way that avoids unnecessary red tape, while others have expressed concerns that this offer will not be sufficient to bridge the financial gaps that employers face. The Chancellor also announced a kickstart scheme, in which employers would be paid to create new jobs for any 16-24 year olds, with an additional programme to incentivise the use of apprentices. The final measures introduced by the government were to remove stamp duty on the first £500,000 of any property sale until March 21st 20201 and to reduce VAT for the hospitality and tourism sectors from 20% to 5%.
Update 4th July 2020
From 4th July, the Foreign and Commonwealth Office has exempted a number of countries and territories from its global advisory against all ‘but essential travel (https://www.gov.uk/guidance/coronavirus-covid-19-countries-and-territories-exempt-from-advice-against-all-but-essential-international-travel)’. These countries have been designated as posing a low risk for British travellers, based on a risk assessment that included in-country public health assessments; it is not clear what metrics were included in the assessment.
Update 3rd July 2020
Schools in Wales re-opened for the first time since March on 29th June to enable pupils to "check in, catch up, prepare for summer and September" (https://www.bbc.co.uk/news/uk-wales-52833506). Start and finish times will be staggered, with only one-third of pupils allowed in a school at the same time. Social distancing will be in place, with desk and chairs kept 1-2 metres apart, while more sanitising and hand washing facilities will be available and regular cleaning will occur, in line with government guidance. Schools in Scotland aim to reopen fully in August with no physical distancing in place provided the suppression of COVID-19 infections in the country continues (https://www.bbc.co.uk/news/uk-scotland-scotland-politics-53139895). Plans to enable schools in England (https://www.bbc.co.uk/news/education-53253722) and Northern Ireland (https://www.bbc.co.uk/news/uk-northern-ireland-53104586) to reopen in September have been released. Both plans incorporate hygiene and physical distancing measures, such as staggered start and finish times and ‘bubbles’ where children and teachers interact only within year groups.
All four countries in the UK have agreed to extend the free schools meal scheme to cover the summer holidays, after it was initially due to finish at the end of the summer term (https://www.bbc.co.uk/news/explainers-53053337).
In England, the government has announced a ‘£1 billion Covid “catch-up” package to directly tackle the impact of lost teaching time’. Over the 2020/21 academic year, a National Tutoring Programme will receive £350 million to increase access to high-quality tuition for disadvantaged young people, with £650 million shared across state primary and secondary schools that can be spent according to the discretion of head teachers, but that is expected to be used for small group tuition (https://www.gov.uk/government/news/billion-pound-covid-catch-up-plan-to-tackle-impact-of-lost-teaching-time).
Update 2nd July 2020
The government has announced a further £500 million funding for local authorities following concerns that 80% of councils in England were at risk of bankruptcy due to the effects of COVID-19. The money will not be ringfenced so it can be spent on local priorities. It is not clear how this money will be distributed across individual local authorities. However, the Barnett formula will apply, meaning the Scottish Government will receive £50 million, the Welsh Government £30 million and the Northern Ireland Executive £15 million. This funding is part of a £27 billion package for local authorities, business and communities to support financial sustainability that includes:
• £3.2 billion of new funding to councils
• £600 million to adult social care to support providers through a new infection control fund
• Over £20 billion in support for businesses
• £500 million in council tax hardship funds to offer economic support to the most vulnerable
• £300 million to support track and trace
The government have also announced the fast tracking of £96 million of investment through the Towns Fund to support ‘town centres and high streets, improve outdoor spaces, build cycle lanes and more’.
Update 30th June 2020
The government’s Coronavirus Job Retention Scheme for furloughed workers will close on 31st October 2020. In October, 60% of furloughed workers’ wages will be paid by the government up to £1,875. Employers will top up wages to reach 80% of the normal wage up to a maximum of £2,500 and will also pay national insurance and pension contributions. Estimates from the Business Impact of Coronavirus Survey (BICS), 23% of the workforce were on furlough for the period 15-28th June, with 68% receiving wage top ups from their employer (https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/conditionsanddiseases/bulletins/coronavirustheukeconomyandsocietyfasterindicators/2july2020).
Update 28th June 2020
Estimates suggest that UK GDP declined by 6% in March and 20% in April, but has since started to recover. Despite the fall in GDP being less than predicted, the Bank of England has emphasised there is a risk of ‘higher and more persistent unemployment’ in the future. In addition, 12-month CPI (Consumer Price Index) inflation declined from 1.5% in March, to 0.8% in April and 0.5% in May, far below the target rate of 2%. The Bank of England’s Monetary Policy Committee has in response voted to purchase an additional £100 billion in UK government bonds ‘to support the economy and ensure a sustained return of inflation to the 2% target’ (https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2020/june-2020).
30th May 2020
On 29th May it was announced that the Government’s Coronavirus job retention furlough scheme would be closed to new entrants on 10th June 2020. In addition, employers will be able to bring furloughed workers back to work part-time from 1st July but will need to pay 100% of wages. Under the scheme, the State has agreed to pay 80% of furloughed workers’ wages up to a maximum of £2500 per month plus national insurance and pension contributions from March-August. From August, employers will be responsible for paying national insurance and pension contributions (https://www.bbc.co.uk/news/business-52853333). From September, the amount paid by the State will be reduced to 70% of wages up to £2190 per month, with employers paying 10% of wages, bringing the total payment up to a maximum of £2800 per month. In October, the Government will pay 60% of wages up to £1875 per month, with employers paying 20% to a maximum total of £2500 per month. The Office for Budget Responsibility has estimated the total cost of scheme from March–October will amount to £80 billion pounds (https://www.bbc.co.uk/news/business-52853333).
The Self-employment Income Support Scheme was also extended on 29th May 2020, with self-employed individuals able to claim a second and final payment in August worth 70% of their average monthly trading profits, up to a capped amount of £6,570 (https://www.gov.uk/government/news/chancellor-extends-self-employment-support-scheme-and-confirms-furlough-next-steps). Up to the end of May, the SEISS had supported 2.3 million claims worth £6.8 billion.
As of 30th April 2020 no border restrictions are in place in the UK, but the Coronavirus Act grants the government the right to close the borders, restrict port or airport activity if necessary ((http://www.legislation.gov.uk/ukpga/2020/7/contents/enacted/data.htm). In London, public transport has been reduced to a core service as a result of staff illnesses and self-isolation. To support critical workers, congestion chargers and low emission charges in London have been temporarily suspended, while NHS workers have been granted free access to a city-wide cycle scheme.
The UK has not yet declared a state of emergency. Military resources have thus far been deployed to help deliver essential equipment to NHS providers, while military planners and engineers are supporting the development of a temporary NHS hospital in London. Through the strategic ‘COBRA’ emergency council meetings, a greater future role for the military to respond during the pandemic has been discussed.
On March 11th 2020 the Chancellor announced a £30 billion package to stimulate the economy (https://www.gov.uk/coronavirus). Six days later a £330 billion loan scheme was announced to support businesses, amid various other support measures. Expenditure measures included injections to the NHS to support the response among others. Taxes on commercial properties have been removed for all companies in the retail, leisure and hospitality sectors. At the local level, authorities have been given guidance about how best to implement local measures, through their local resilience forums to mobilise local resources.
In addition, these measures included the Coronavirus Business Interruption Loan Scheme (CBILS) to support SMEs, which provides an 80% percent loan guarantee for up to £5 million, and the Coronavirus Large Business Interruption Loans Scheme for larger businesses, which provides an 80% percent loan guarantee for up to £50 million.
A Bounce Bank loan scheme for SMEs has also been put in place by the government, with businesses able to borrow between £2,000 and up to 25% of their turnover, with a maximum loan of £50,000. The Government will guarantee 100% of the loan, with no interest to pay for 12 months, followed after by an interest rate of 2.5% per month (https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan).
Government figures released on 12th May showed that £14 billion in loans and guarantees had been issues to support businesses, including 268,000 Bounce Back Loans worth £8.3 billion, 36,000 CBILs loans worth over £6 billion, and £359 million through the Coronavirus Large Business Interruption Loan Scheme (https://www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october).
State aid has been announced to cover sick pay and to pay wages to prevent of furloughed workers to prevent redundancy (80% of wages for those not working due to COVID-19 up to a maximum of £2500, plus national insurance and pension contributions). On 21 April 2020, the Government furlough scheme went live, with 67,000 claims made in the first 30 minutes. It is expected that 2.8m workers from 387,000 companies will be paid subsidised wages through the furlough scheme. On 12th May the furlough scheme was extended until the end of October. To encourage a return to work, flexibility will be introduced in August, with furloughed workers able to return part-time, with employers paying a percentage towards salaries (https://www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october).
Under the Self-employment Income Support Scheme (SEISS), the self-employed can also apply for a grant worth 80% of their average monthly profits over three years, provided they earn less than £50,000; the money will be paid directly into people’s bank accounts by HMRC (https://www.gov.uk/coronavirus). VAT payments for the self-employed for the second quarter of 2020 have been deferred until the end of the financial year and income tax for six months.
From 16 March to the end of April, more than 1.8m people made new benefits claims through the universal credit system, over 250,000 claimed Jobseeker’s Allowance and over 20,000 claimed Employment Support Allowance according to the Department for Work and Pensions, more than 6 times the usual number.
Up until 12th April 2020, Almost £3bn has also been lent to more than 16,00 small businesses under the Coronavirus Business Interruption Loan Scheme (CBILS), with £11.2bn committed through the “corporate loan facility” for large investment-grade companies. Approximately £300m is being loaned every day to businesses affected by physical distancing measures (https://www.ft.com/content/35672145-5842-3f39-8a5f-5d073721548b).
On 19th March, the Bank of England’s Monetary Policy Committee reduced the Bank Rate by 15 basis points to 0.1, to increase the Bank’s holding of UK government and non-financial corporate bonds by £200 billion and to expand the term funding scheme for small and medium sized enterprises (TFSME) (https://www.bankofengland.co.uk/news/2020/march/boe-measures-to-respond-to-the-economic-shock-from-covid-19). These measures will provide cheaper loans for businesses and households and will help boost spending and investment.
In April, the government announced an increase in working tax credit and child benefit as well as additional funding to state funded schools to provide continuity for children with special educational needs. This includes £3.8 billion of funding that has been announced for local authorities to meet extra demand and costs arising from coronavirus (COVID-19), including costs in children’s social care.
On 8 April 2020, the Chancellor announced that £750 million would be made available to support frontline charities, including hospices and those supporting domestic abuse victims.
On 17 April 2020, the Business Secretary announce that a new Vaccine Taskforce will be set up comprising of representatives from Government, academia and industry focusing on the research, funding, and production of a COVID-19 vaccine. In addition:
• 21 new research projects combating coronavirus will receive government funding from a £14 million pot investment to rapidly progress treatments and vaccines
• The government has pledged £250 million from the government aid budget, the biggest donation by any country, to the international programme to develop a coronavirus vaccine under the Coalition for Epidemic Preparedness Innovations (CEPI).
On 20 April 2020 the Chancellor announced a £1.25 billion coronavirus package to protect firms driving innovation in the UK. The package includes:
• a £500 million investment Future Fund for high-growth companies (ranging from tech to life sciences) impacted by the crisis, made up of funding from government and the private sector
•. £750 million of grants and loans for SMEs focusing on research and development
- Protection for vulnerable groups
Protection for people vulnerable to domestic violence has been noted, but no specific national proposals have yet been put forward and these plans are being managed by local authorities. On March 27th 2020 the government, through the Ministry of Housing, Communities and Local Government, requested that local authorities provide temporary accommodation to all homeless people within 48 hours to help prevent further spread of the virus. However, it is unclear how this will be achieved given lack of funding and acute housing shortages in many areas. The Home Office has also announced that asylum seekers will not be evicted from government accommodation for a period of three months, starting March 28th 2020.