Sunak's winter plan concludes part one of Covid-19
Kirsty McGregor summarises the Chancellor’s wide-ranging Winter Economy Plan and rallies accountants to continue supporting their clients into the next stage of the government’s Covid-19 response.
At times, the pandemic has resembled a surreal film or documentary. The Prime Minister’s harsh words at the beginning of the week and the Chancellor’s attempt at a pick-me-up a few days’ later feels like the end of part one.
As seasons change, and with many of us still working remotely, Rishi Sunak attempted to soothe a nation still struggling to comprehend their ‘new normal’.
More SEISS grants
The Chancellor’s schemes in his Winter Economy Plan seemed wide-ranging. The third and fourth self-employed grants, small though they are, were unexpected. I was surprised there was little for specific sectors who have suffered the most.
I understand the government’s reluctance to introduce something where a line has to be drawn for a definition when whole supply chains supporting these sectors are also affected, such as the glass producer selling to the pubs or the paper bag manufacturer supplying city centre sandwich shops. The UK’s SIC codes are so out of date and there is nothing else which we can use which is accepted officially.
The loan extensions give us some breathing space. Many business owners have been in a state of suspension for much of the last few months, waiting to see how things pan out rather than make any longer-term decisions. The need to assess cashflow and outlining the route to the business returning to full trade is still essential. If that hasn’t been done yet, the time is now.
In a rush before the expected 30 September deadline, Capitalise saw a huge increase in the number of funding enquiries for CBILS this week. Clearly, there are still many business owners who had only secured a Bounce Back Loan and are now ready to consider a larger amount.
The terms of this scheme are unlikely to be repeated in the open market, so we should grab that opportunity in the next few weeks to have those conversations again with clients and encourage them to make some decisions.
Goodbye CJRS, hello job support scheme
Meanwhile, the job support scheme (JSS) is already coming under fire as the reality of the scheme is realised. We await the detailed guidance with bated breath; for example, I’m wondering if annual PAYE scheme directors will miss out again because they haven’t filed an RTI in this tax year before 23 September yet. Plus, the Chancellor still didn’t see it was possible to support the lost dividend income of limited company directors. Many business owners are feeling excluded and forgotten again.
This scheme is not quite like the German Kurzarbeit offering where the government contributes to the employee’s lost wages for shorter hours, but the employer does not. Instead, the JSS has clearly only been designed to support a group of businesses who are most definitely viable and probably already returning to normal trading conditions, but who find recruitment difficult, time-consuming and expensive.
So rather than risk laying off staff now with the associated costs of redundancy, and foregoing the Job Retention Bonus, only to find they need to recruit staff again in six months or so, these businesses would contribute to the cost of them staying at home until they return to full utilisation.
Numbers are being crunched in earnest as businesses and accountants realise that employers of the lower-skilled workers and particularly part-time workers are probably unlikely to find the JSS attractive.
As CJRS makes furlough more costly for employers again from next week, I think this will be the catalyst for many businesses to make those difficult decisions in the next few days about the future of their employees and the wider implications for the future of their business too.
Where do accountants fit in?
Accountants need to be vocal and visible in our support. We need to continue to be proactive in reaching out, yet again. The ethos of #LeaveNoBusinessBehind is to encourage all accountants to have that one-to-one dialogue with each client. And never has that been more necessary this week.
It’s time-consuming, it can include difficult conversations, but it’s an investment which will pay dividends. During this campaign I’ve heard from accountants who have 100 business clients or several thousand business clients and it’s been very satisfying, if not emotional at times, to hear how they have managed to speak to each of their clients and the impact which those conversations have had.
We are so incredibly busy. Our work will become no less as the new job support scheme is introduced and extended into next year. Whether the Treasury’s schemes protect the number of jobs and businesses they have modelled will only be seen in time. But our role is still essential.
The power which each accountant can have when they put their arms around that client, virtually in this socially distant world, is providing the whole of our SME economy with the strength and resources to make plans, to take decisions, to live through part two and create a new vision for their world – which we’ll find when this particular drama ends.
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Kirsty is a chartered accountant and Chairman of The Corporate Finance Network.
She has advised SME clients on corporate finance matters and transactions, including having set up several corporate finance departments for regional firms of accountants.