Alok Sharma, the business secretary, is considering renewing lifeline grants for small businesses which find themselves in sudden local lockdowns.
Ministers are worried about the effects on local economies, especially in the North, if small businesses have to shut up shop again because of wildcat lockdowns.
The so-called Red Wall constituencies in the North of England will be especially vulnerable to sudden lockdown once the furlough scheme comes to end in October.
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Ministers are looking at a system of local lifeline grants to help small businesses keep staff on, modelled on an £11bn scheme used during the lockdown, according to The Times.
Pubs, cafés, restaurants, hotels and other hospitality businesses forced to close during the lockdown were eligible for grants worth up to £25,000 each, while other small businesses were handed £10,000 in one-off support.
Almost one fifth (17 per cent) of small businesses don’t think they’d survive another lockdown and would be forced to stop trading permanently if one came into effect, according to a new report by small business insurer Simply Business.
Alan Thomas, UK CEO at Simply Business, said: “The nationwide lockdown has had a significant effect on all businesses – from the very largest to the smallest. And our research has highlighted the potentially fatal impact that further lockdowns could have on many small businesses in the UK.
“Few have been financially harder hit than SMEs, small businesses, and the self-employed, and it’s telling that many live in fear of another lockdown and the consequences it would have on their business.”
Extend furlough scheme
Meanwhile the Digital, Culture, Media and Sport (DCMS) Committee is calling on chancellor Rishi Sunak to extend the furlough scheme for companies working in the arts and leisure sectors amid warnings of “mass redundancies”.
Committee chairman Julian Knight has warned that if furlough is cut off in October, “not only will mass redundancies follow but we can expect many cultural organisations to go out of business, never to return”.
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And the Confederation of British Industry (CBI) is pushing for a package of further business support for companies ahead of the autumn Budget, expected in November, including a replacement for the job retention scheme.
“Many companies will find that cliff edge very difficult to manage,” Dame Carolyn Fairbyn told the Financial Times, pointing out that about a quarter of businesses in hospitality, leisure, retail and travel have warned they are at risk of insolvency.
The CBI is pushing for a more targeted approach for companies most at need, such as nightclubs and theatres, which have yet to reopen. Workers could commit to a minimum of 50 per cent of their normal hours, for example, and the terms of a replacement furlough scheme would be less generous.
The employers’ organisation also wants the government to defer VAT payments for a further quarter next year, and also extend the 100-per-cent loan guarantee which has supported bank lending to businesses.
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