Rishi Sunak, chancellor of the exchequer (pictured), has pledged to provide employers with ‘business interruption’ loans of up to £1.2m and to refund businesses their statutory sick pay (SSP) payments as part of a £30bn package of measures to protect organisations from the effects of the growing coronavirus outbreak in the UK.
However, many experts have raised concerns that the measures focus too much on supporting smaller businesses and do not do enough to help larger organisations face the challenges of the virus.
In his first budget speech, Sunak said the government would guarantee 80 per cent of the value of bank loans made to SMEs struggling to pay salaries, bills or for new stock during the outbreak, up to the value of £1.2m. The loans would be provided by the British Business Bank.
- Fifth of businesses have not considered pay for self-isolating staff
- NHS pension rules may prompt ‘mass exodus’ of leaders in next two years, report suggests
- Find the latest HR advice on Covid-19 at the CIPD’s Responding to the coronavirus hub
Firms with fewer than 250 employees will also be able to claim a refund for the first two weeks of SSP paid to employees as a result of coronavirus. This followed the previous announcement that SSP will be paid to all those who are advised to self-isolate, even if they do not have symptoms.
Sunak also outlined other measures to support the UK during the pandemic, including extra NHS funding and changes to doctors’ pensions so that high earners were no longer penalised for working extra hours.
Ben Willmott, head of public policy at the CIPD, welcomed the additional support for businesses in the budget, but urged the government to do more to protect people and jobs.
Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter
“The government must consider the creation of a temporary wage subsidy fund payable to employers to help organisations to minimise the need for redundancies if they have to close operations for any length of time, or if demand for their goods or services is hit as a result of the spread of coronavirus,” said Willmott.
Other experts raised concerns that the measures were too exclusively focused on smaller businesses. Tom Hadley, director of policy at the Recruitment & Employment Confederation, welcomed the boost to “cashflow problems” for SMEs, but said there appeared to be “little support for business of more than 250 employees”, which is likely to include temporary workers on the books of recruitment agencies.
Bob Trunchion, tax partner at MHA Macintyre Hudson, also said medium-to-large-sized businesses had been overlooked. “It’s true that smaller businesses are more vulnerable, but even some larger companies could experience substantial cash-flow problems if the virus starts to bite.”
And Julia Kermode, chief executive of the Freelancer and Contractor Services Association, said that while the SSP refund was welcomed, it would not be available for most umbrella firms, which will have more than 250 employees.
The plans to recalculate pension taxes for higher earners were welcomed by Danny Mortimer, chief executive of NHS Employers. He said employers in the health service would hope the announcement “reassures clinical colleagues so they can agree to undertake additional work without the perverse consequences that have resulted in recent years”.
And Jonathan Watts-Lay, director at Wealth at Work, said changes to doctors’ pensions were not unexpected. “Given the implications of coronavirus, it is unsurprising the tapered annual allowance has been adjusted by £90,000 as this will now ensure that most senior NHS staff can work additional hours for the NHS without their AA being reduced.”
Elsewhere in the budget, Sunak made several other promises employers should take note of, including:
- An extra 12 weeks' paid leave for parents of premature babies
- An increase in the employment allowance for national insurance contributions from £3,000 to £4,000, which will come into effect in April 2020
- The introduction of a £3bn National Skills Fund with the aim of improving adults' technical skills
- A 'significant' funding package to improve recruitment and retention in the NHS, which aims to increase the number of nurses by 50,000, as well as GPs by 6,000 and other primary care professionals by 6,000