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East Midlands Chamber News

Job Support Scheme combined with new cashflow measures gives businesses breathing space – but more support will be needed, says East Midlands Chamber

Commenting on Chancellor Rishi Sunak’s announcement today about a new Job Support Scheme and other measures to help cashflow among businesses, East Midlands Chamber (Derbyshire, Nottinghamshire, Leicestershire) director of policy and external affairs Chris Hobson said: “Following the Prime Minister’s update earlier this week in which he put businesses on notice that they could be facing another six months of restrictions, the additional measures announced by the Chancellor today will give many businesses some important breathing space.

“It’s crucial that employers are given the help to retain jobs that would otherwise be viable in normal times. The introduction of the Job Support Scheme from 1 November means those businesses that had been looking anxiously towards 31 October and the end of the furlough scheme can now plan ahead with a bit more certainty.

'Pay as you grow' and VAT payback flexibility will ease cashflow worries

“Cashflow has been raised as a major concern among businesses for the past 12 months and longer – originally due to stockpiling ahead of Brexit, and then as a result of the pandemic’s impact on demand. Results from our Quarterly Economic Survey for Q3 2020 showed cashflow worsened for four in 10 businesses over the previous three months, which came on top of a reduction in cashflow for six in 10 in the second quarter.

“This is a huge obstacle at a time when businesses are looking to return to growth, as well as with the end of the UK-EU transition period on the horizon meaning many organisations need to stockpile once more.

“The flexibility afforded to businesses via the ‘pay as you grow’ payback scheme on bounce back loans, the ability for deferred VAT to be repaid in 11 instalments rather than one lump sum, and the extended Government guarantee for the Business Interruption Loan Scheme all give breathing space to organisations that otherwise would have been staring down the barrel in six months’ time.

“Finally, the hospitality and tourism sectors have been among the worst hit by the pandemic, so extending the 5% VAT rate to the end of March provides some much-needed support to keep businesses open.

“While this is one of the more encouraging days for business in recent times, the Chancellor must remain open to taking additional action to supporting those parts of the economy facing unprecedented challenges over the months ahead.

“This isn’t the end of Covid-19 and this won’t be the end of the support measures needed, so the Government must work closely with businesses locally and nationally to understand how it can best support them to get through this.”

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