Business groups demand more targeted support as ‘lockdown by stealth’ disrupts retail

lockdown by stealth disrupts retail
A pedestrian wearing a face covering to combat the spread of Covid-19, walks past the Christmas-themed window display of a clothes shop on Oxford Street in central London on December 15, 2021. (Photo by TOLGA AKMEN/AFP via Getty Images)

As the chief medical officer advised the public to ‘de-prioritise social contacts’ in response to the spread of the Omicron coronavirus variant, business groups have warned about the enormous impact of the new regulations on businesses, particularly in the retail and hospitality sector.

Baroness Ruby McGregor-Smith, president of the British Chambers of Commerce, said the Treasury’s silence in the current episode is ‘baffling’.

“Until now the Treasury has stepped up at every stage of this crisis to help offset restrictions that limited business’ ability to trade fully, which is what makes its complete absence at this crucial moment all the more baffling,” she said.

“Businesses have heard nothing from the Treasury since this new round of Covid interventions arrived over a week ago. Not even a rationale has been provided for why it believes no new support is required. They deserve better.”

With the UK recording its highest ever number of Covid cases in a single day, and this being set to rise further in the coming days and weeks, McGregor-Smith noted that businesses now face “the two-punch combination” of serious issues with staff absence and plummeting consumer confidence.

“Many of these firms, who have survived nearly two years of challenging trading conditions, are now seeing their vital festive income melt away in front of their eyes,” she said.

“A great number of sectors have been impacted by these restrictions already and the number of firms at risk is growing every day. The Treasury knows what can be done, we have already written with a suite of policy measures they can put in place right now to alleviate this crisis.”

Bira chief executive Andrew Goodacre said the independent retailers are currently feeling a “sense of déjà vu” as another important December is being disrupted by Covid.

“After good sales in October and November, it is so disappointing to see retail activity curtailed in December with the announcement of new regulations to deal with the spread of Omicron,” he said. “The current wave of announcements with new regulations throughout the UK makes the current situation feel like lockdown by stealth.”

Whilst shops are not closed, Goodcare said the restrictions have a negative impact on consumer confidence and sentiment and this is evident in the reduced footfall being reported throughout the UK.

Noting that businesses need to be able to plan ahead with a degree of certainty, he urged the government to provide a clear statement regarding the support that will be made available to businesses, consistently reviewed to target the support to those businesses suffering a drop in demand/ sales.

His other asks include:

  • Implementation of the Business Rates Relief Fund before Christmas so local authorities can help impacted businesses as soon as possible
  • Review the recent budget by reducing 2022/23 business rates down to the current scheme (i.e. 50% reduction increased to 75% reduction)
  • Reintroduce free testing kits for businesses as more individuals are expected to take daily tests
  • Explore options for utilising existing resources for supporting the most impacted businesses in the short-term
  • Provide further flexibility of the repayment of CBILs and Bounce Back Loans to those businesses suffering significant financial hardship but not classed as in distress

Federation of Small Businesses (FSB) added that it’s not only Plan B restrictions that small firms are having to grapple with at the moment.

“Surging operating costs, labour shortages and supply chain disruption are adding to the nightmare before Christmas being experienced by millions of small business owners,” FSB national chair Mike Cherry said, referring to the new Office for National Statistics figures which show 14.3% growth in the headline rate of input prices in the year to November, and a 5.1% rise in the consumer prices index over the same period.

He added that the imposition of Plan B, in this backdrop, meant a new set of rules for small firms to get across, and a further hit to already suppressed consumer demand for festivities, in an environment where high prices are already eroding returns.

“Despite that fact, business support measures have not been adjusted to reflect new realities,” he said. “Many small businesses – especially those in the hospitality sector – which were thriving at the start of last year are now struggling to make ends meet because of a coalescing of factors beyond their control. This supposedly pro-enterprise government needs to step up.”

Cherry asked the government to reinstate the Covid sick pay rebate so smaller firms can recover the cost of supporting those who need to isolate and relaunch the workplace testing initiative – enabling test and release in scenarios where staff are pinged at work.

He also asked to increase the current 66% business rates discount for hardest-hit firms to 100% to directly assist firms with the spiralling costs of doing business.

“Coupling that adjustment with an increase in the targeted Employment Allowance to £5,000 would make a real difference. Policymakers also need to accelerate delivery of the £1.5bn business rates relief fund. It was launched many months ago, but is yet to pay out a penny,” he said.