Increase support or face 'catastrophic economic consequences', bosses warn PM

18 October 2020, 07:30

File photo: People wearing face masks walk past a advertisement on Market Street in Manchester
File photo: People wearing face masks walk past a advertisement on Market Street in Manchester. Picture: PA

Existing economic support packages will not be enough to stave off mass redundancies and business failures during the coronavirus crisis, bosses have warned Boris Johnson.

The British Chambers of Commerce told the Prime Minister that any new lockdown restrictions must come with "truly commensurate" financial support or risk "catastrophic economic consequences".

In a letter to Mr Johnson on Saturday, they raised particular concern about the Tier 2 restrictions imposed on London and other areas on Saturday because they "dramatically" hamper businesses without extra support.

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The Government said all restrictions "are guided by the science" in order to bring down transmission rates and stressed that it had introduced a £200 billion support package.

In the letter, the chambers said the Job Support Scheme, which sees the Treasury pay two-thirds of workers' wages in businesses told to shut in Tier 3, will "assist some firms".

But they added that firms they represent say it "will not be enough to stave off mass redundancies and business failures" as they called for "enhanced support".

"Chambers are clear that any new restrictions must go hand in hand with truly commensurate financial support for wages and day-to-day running costs," they said.

It comes as retired UK Supreme Court judge Lord Jonathan Sumption criticised the Government for initiating a "repeat performance of a policy that has demonstrably failed".

"Our Government is planning to destroy businesses and jobs, to increase poverty, to aggravate mental illness, and to inflict untold distress on many millions of active and healthy people who are unlikely to suffer serious symptoms even if they are infected," he said.

The chambers set five tests to prevent economic disaster, including restrictions being evidence-based, and ensuring firms have time to prepare and have adequate compensation.

They also call for the Test and Trace system to be "significantly" improved and for a "clear process" for altering restrictions.

"Over the critical weeks ahead, these tests must be met - to avoid serious damage to business and consumer confidence, and potentially catastrophic economic consequences," they added.

The bosses demanded a response within seven days on how the tests will be met.

A Government spokeswoman said: "Our expanded Job Support Scheme will protect jobs in businesses that are closed or facing challenges, we've increased grants for firms required to close and are providing additional funding for local authorities and devolved administrations.

"This is alongside existing support measures including extended VAT cuts, businesses rates holidays and our extended loan schemes."

Shadow business secretary Ed Miliband said that firms "across the country are sounding the alarm".

"The so-called Job Support Scheme won't work for many, the grants available to businesses are a fraction of what was provided in March, and firms severely affected by restrictions but not legally closed are being left high and dry," the Labour MP said.

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"Public health measures must go hand in hand with the necessary economic support.

"Business is clear that the Government's sink or swim mentality isn't working.

"To prevent business failures and massive redundancies, the Government must get the message and provide the support commensurate with the scale of the economic emergency."