As the new year has begun, the pandemic has stretched over and the somewhat aftermath of the previous treacherous year has begun- filled with uncertainty and predictions, especially within the economic world. Rishi Sunak, Chancellor of the Exchequer and the Bank of England have set out plans to help protect the jobs of people nationwide as well as supporting and creating new jobs. Plans included a kickstart scheme, a job retention bonus, VAT cuts and so much more.
Since the new lockdown had been announced earlier this week, it had also been established that the furlough scheme will be extended. A new £4.6 billion bailout has been unveiled to help the most vulnerable industries such as hospitality and leisure venues- both of which have been heavily affected by the pandemic and imposed lockdowns. However, those industries will be receiving a one-off grant of up to £9,000, which have increased the government’s COVID spending costs to approximately £300 billion. This furlough scheme aims to give a bit of hope and financial security. The government has also said that they have set out this scheme in the hopes of being sufficient enough, allowing businesses to survive the next seven weeks which are anticipated to be very detrimental.
There are approximately over 600,000 venues across the United Kingdom, which means another 594 million pounds will be extracted into a discretionary fund, in support of the affected establishments. The discretionary fund has been established for local councils to financially aid their local businesses, more so for those who are not eligible to receive government grants and are heavily affected by the lockdown restrictions and guidelines. On the other hand, many business owners have said that this is not enough as there has been the unprecedented pressure of paying for VAT and other forms of tax, which have been put in place to avoid bankruptcies.
The furlough scheme was introduced in March last year by Rishi Sunak, in which it will be extended to the end of April 2021. Although it has been somewhat beneficial towards business owners within the UK, it has added another excruciating sum of £5billion to the cost of the pandemic which is currently at 280billion pounds. With more and more lockdowns being put in place and the vaccine programme being a relative conception- it is practically impossible to say as of when the pandemic will end and estimate when life will resume back to normality. Financial relief and furlough support may potentially disappear as of March or April this year as the government can simply no longer afford to continue the scheme.
There had been hints during Chancellor Sunak’s announcement as to whether there will be any kind of further financial support in the upcoming year, but it has not been specified what exactly. He had mentioned in his announcement that “the stock of the range of support that we’ve put in place and set out the next stage of our economic coronavirus response”, referring to the budget in early March.
It is apparent that not all of those in power agree with the ideas of Mr Sunak as Adam Marshall- head of the British Chambers of Commerce responded: “We need to see a longer-term plan to support businesses well beyond spring and throughout 2021”. He continued to say that it cannot only be those on the front line of retail and hospitality, but we must also take into consideration firms in supply chains and larger organisations who are also suffering as a result of the imposed restrictions. The repercussions of Rishi Sunak continuously dishing out business grants may be seen as very worrying in the future as it is all from the taxpayer’s money. With an approximate of 5 to 10 billion pounds a month being forked out for the furlough scheme, it is expected that there will be an immense increase in tax later on in the future.
However, news has spiralled around that many people have been committing ‘furlough fraud’, in the aims of claiming a bit of extra cash on the side. According to the Metro.co.uk, “More than £3,500,000,000 of taxpayer’s money has been lost to furlough fraud”. It had also been discovered by HM Revenue and Customs (HMRC) that up to 10 per cent of furloughs that had been given out were due to fraud and error. The committee as quoted by the Metro.co.uk had said: “that the government should have done more to firewall the economy after years of warning about the risk of a pandemic”.
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