COVID-19: Rishi Sunak pledges £350bn in new “whatever it takes” measures

Last Updated on: 22nd November 2023, 05:10 am

Rishi Sunak announced this week that he would do “whatever it takes” to nurse the economy through the uncertain times ahead, echoing a phrase that Mario Draghi (the then ECB President) used in 2012 when he faced a growing euro crisis.

Less than a week on from a Budget which felt radical at the time and now feels like a distant memory, the Government is advertising a headline figure of £350bn of new measures. This is made up of £330bn of loan guarantees alongside £20bn of direct measures.

The plans announced included the following:

• for SMEs with a turnover of up to £41m, an extension of the government guaranteed “business disruption” loans which were announced at Budget last week. These loans will now be available for up to £5m with interest payments covered by the Government for up to six months
• support for all employers of fewer than 250 employees to reclaim up to two weeks’ statutory sick pay paid for sickness absence due to COVID-19
• the “smallest 700,000 business” (those currently eligible for either small business rate relief or rural rate relief) will be able to access cash-grants of up to £10,000. Local authorities will contact these companies directly, they do not need to make applications
• wider availability of commercial paper for investment grade corporates under the Covid Corporate Financing facility. This is designed to keep the market for Commercial Paper issues open for Investment Grade and higher rated corporates who would normally have been able to access this market but are unable to do so in present circumstances. Although to access this source of finance you do not have to have launched a Commercial Paper programme before and the facility is said to be only open to corporates who can “demonstrate they were in sound financial health prior to the shock”. We are anticipating more details to be published via a Market Notice imminently.

The exact terms on which loans and grants will be available have not yet been published, though it was claimed they will be “favourable”. The timeframe the Chancellor announced on Tuesday was that the funding would be available from the beginning of next week, and of course between now and then we expect there to be greater detail emerging.

At the moment it looks as though there may be a gap for those businesses not large enough to access commercial paper but too large to take advantage of the extended business disruption loans. Though it is worth noting that the tone of the Chancellor’s announcement made it clear that there will be more to come.

The Chancellor also clarified:

• the position with regard to pandemic and/or government-order closure insurance and explained that where companies have such cover, the recent government advice is sufficient to trigger pay-outs under such cover
• that HMRC would look more sympathetically on time to pay requests from businesses hit by the current circumstances.

Further announcements are expected in respect of the airline and travel industry, the rental sector and employment more generally as well as measures to help individuals. We will look to update this note with relevant details and links in due course.

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By John Connor, Partner, Philip Withey, Partner, and Jake Unsworth, Solicitor, at law firm Womble Bond Dickinson