Government announces £1bn support scheme for businesses impacted by Omicron Covid variant in England

The Chancellor Rishi Sunak has announced a £1bn support scheme for businesses hit by the tougher restrictions brought in to tackle the Omicron Covid variant.

The funding, which has primarily been targeted at the hospitality and leisure sectors, will see one-off grants of up to £6,000 per premises offered to firms in England.

Set to become available through local authorities in the coming weeks, the package comes as the Government announced it would also use the cash to cover the cost of Statutory Sick Pay (SSP) for Covid-related absences for firms with fewer than 250 workers.

A further £30m will be made available to cultural organisations and bodies throughout the winter months via the culture recovery fund, the Treasury said.

Through the Barnett formula, the Government said it would make £80m available to the Scottish Government, £50m for the Welsh Government and £25m for the Northern Ireland Executive.

It comes after hospitality bosses warned their businesses were being severely impacted by cancellations and a lack of Government support in the wake of the Omicron wave.

Why has the Government announced this funding?

Covid cases have spiked in December, with the Omicron strain behind much of the rise across the UK.

Thus far, the Government has not introduced tougher measures, although Boris Johnson suggested they remained on the table after a meeting of his cabinet on Monday (20 December).

This situation combined with mixed Government messaging on Covid guidance has led consumer confidence to plummet and has also seen an increase in booking cancellations and requests for refunds, according to hospitality and leisure bosses.

Earlier today (21 December), the sectors said the situation was making it hard for firms to make business decisions.

Announcing the new support measures, the Prime Minister acknowledged this was why the Government was stepping in.

“With the surge in Omicron cases, people are rightly exercising more caution as they go about their lives, which is impacting our hospitality, leisure and cultural sectors at what is typically the busiest time of the year,” said Mr Johnson.

“That’s why we’re taking immediate action to help with an extra £1 billion in grants to these industries and reintroducing our Statutory Sick Pay Rebate Scheme.

“I urge people across the country to please get boosted now to secure vital protection for yourselves, your loved ones and your communities.”

The Chancellor, Rishi Sunak, added that he was aware of the “huge uncertainty” businesses were facing in the wake of Omicron.

How the industry has reacted

The hospitality and leisure industries have reacted positively to the announcement.

Emma McClarkin, Chief Executive of the British Beer and Pub Association said the support would provide a “vital lifeline” amid “dramatically reduced trade” for pubs and brewers.

However, whilst it echoed this sentiment, major business organisation the Confederation of British Industry (CBI) said the scope of the funding package ought to be broadened.

“The latest targeted package offers a fair variety of support to help keep businesses open,” said CBI chief economist Rain Newton-Smith.

“That said, the international travel and tourism sector remains disappointingly out of scope despite the heavy toll it has taken for many months and its vital role in enabling international trade and supporting jobs.

“If infection and hospitalisation rates continue to grow across the country, the potential of further measures will weigh on firms. The Government must monitor the situation closely and ensure that any new restrictions go in lock-step with further targeted cashflow support to those firms most in distress.”

Think tank the Institute for Public Policy Research (IPPR) said the new funding should be the “first step” and that Rishi Sunak “should go further” with his financial support to protect jobs, limit Covid-related economic harm and boost the UK economy in the long term.

“This wave of Covid-19 is happening just as inflation and price spikes are causing a cost-of-living crisis. It’s not sufficient to just support businesses through this crisis, further measures to support people’s incomes are needed,” said Dr George Dibb, the head of IPPR’s Centre for Economic Justice.

“The chancellor has subsidised the cost of sick pay to businesses but not shifted the incentives to make self-isolating financially sustainable for many people.

“Mr Sunak should urgently increase the level of sick pay and expand eligibility so more people can claim it. Additionally, we support putting in place a new furlough scheme and supporting the worst-off with a Universal Credit boost.”

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