THE Chancellor must ‘act now to help thousands of individuals and businesses who are struggling.’
Sefton Central MP Bill Esterson met with business leaders from across the Liverpool City Region to help understand the gaps in the job retention and business grant and loan schemes announced by the Chancellor. The MP, also Shadow International Trade Minister, said thousands of businesses risked going under due to the unprecedented slowdown in the economy.
He said: “There are numerous gaps in the support currently being offered. I am hearing from constituents every day who are telling me the problems they are facing. There are businesses that are based in shared offices where they pay their business rates within their rent, so because they are not a business rates payer they are not eligible for the small business grant of £10,000.
“The landlord, because his or her name is on the business rates bill, will get the grant instead, yet may still be receiving rent. One business owner who contacted me doesn't want to take out a loan because he has no idea what demand will be like when he is allowed to start operating again. He has had to let his one employee go.
“The issue with bank loans is huge, as banks are often trying to get businesses to take out their standard products instead of the government-backed loans. The government backed loans expose the banks to 20% risk, therefore they are charging high interest rates for these.
“I'm told that the local authorities in the City Region have done a great job getting the grants out to qualifying businesses who have applied but many businesses have not applied because they don't know about the grants and many businesses have been left behind because they don't qualify.
“Constituents have contacted me who started a new job since February 28 and have now been made made redundant. They are told to go back to their old employer to qualify for the job retention scheme but their former employer is not able to help. Unless you were on the payroll on February 28 you don't qualify for the job retention scheme by your employer so these poor employees are left with nothing.
“Agency workers are being told that they are eligible for the job retention scheme but the company can't take advantage of it because they have not been told when the government's money will come through, and they don't have adequate cash flow to pay 80% wages until it does.
“Everyone must be put in a financial position where they can make the right choices for their health and the health of others. If people are put in a position where there is no pay if they don't go to work, they might not always make the right choice. Everyone has to pay the bills. So it is so important that businesses are understanding about the choices people face, especially if they live with vulnerable people. Employees must be able to access adequate sick pay and the government support must filter through as quickly as possible."
Mr Esterson said there were several gaps in the current economic support packages:
- Employers are choosing not to furlough staff even though they are eligible, because they have not been told when they will be repaid by the government
- Banks have been reluctant to lend via the CBILS scheme and have been trying to push businesses onto mainstream products
- A hardship scheme for businesses that cannot access other help is needed
- Company directors who are paid via dividends are not able to access support through the self employed scheme
- Universal credit is inadequate for those who have average to higher earnings and high outgoings
- Businesses who pay business rates through their landlord are not able to access grants
- Landlords of commercial property are pursuing struggling businesses for rent, and threatening legal action
- Self employed support needs to be provided before June, which is the current expected date when payments will be made
- Any newly self employed, who have not submitted at least one tax return, miss out on the support scheme
- Social enterprises have been deemed ineligible for the small business grants
- Evidence of income needed for universal credit claims was seen as a barrier to getting support
- Five week wait for universal credit is too long
- Banks are still directing borrowers to their "business as usual" products rather than the emergency funding
- Interest rates on business interruption loans are not capped and are too high
- Customers are finding banks difficult to contact
Mr Esterson added: "The Chancellor Rishi Sunak has announced an unprecedented package of support for businesses and employees. But these are not so far working in practice as the cash is not reaching workers or employers. He must act now to plug the gaps in the financial support available so everyone has the support they need to stay home and stay safe."<