Rishi Sunak announces new support for Tier 2 businesses

UK Chancellor Rishi Sunak has outlined a range of new financial support measures for businesses, including in the retail sector, that are impacted by the new 3-tier system for controlling Covid-19 infection rates. The steps are designed to try and protect as many jobs as possible while containing rising cases.

This includes those businesses that are allowed to remain open, but facing falling revenue, in particular those in tier 2 regions such as London and Birmingham.

“A significant fall in consumer demand is causing profound harm to their industries,” he said in a statement to Parliament this morning. “It is clear that open but struggling businesses require further support.”

Under the new 3-tier system that was outlined by the government earlier this month, pubs and bars not serving food in the highest risk regions are being forced to close, alongside leisure centres, gyms, betting shops and casinos. While such businesses in tier 2 are allowed to remain open, trade is being heavily impacted by the ban on mixing between households anywhere indoors. Retail shops are allowed to stay open across all three tiers, but are expected to suffer from reduced high street footfall resulting from the new rules.

Sunak has therefore unveiled three new measures aimed at supporting businesses that are staying open but experiencing less trade.

  • A new grant scheme for businesses in tier 2 regions, in which local authorities will be able to distribute direct cash grants worth up to £2,000 per business for every month the restrictions apply.
  • An amended job support scheme, in which staff will only need to work for 20% of their usual hours to be eligible for two-thirds of their salary instead of the 33% as was previously outlined. The employer contribution to these wages will also drop from 33% to 5%, with the government making up the rest. The scheme is designed to help businesses facing falling demand to retain staff during this difficult period. The updated initiative will be available to eligible businesses across all alert levels.
  • An increased contribution to the incomes of the self-employed, doubling from 20% to 40% of their incomes, up to a maximum of £3,750 per month.

These steps are in addition to previously announced packages for businesses in tier 3 areas that have been forced to close.

Sunak added: “I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we’re doing today. These changes mean that our support will reach many more people and protect many more jobs.”

In recent months, a number of major retailers have announced plans to cut significant numbers of jobs due to revenue losses and the consumer shift away from stores to online during the Covid-19 pandemic. These include M&S, Boots, WHSmith, and TM Lewin.