Staggering Scale of covid loans – business news 26 March 2021.
James Salmon, Operations Director.
Staggering Scale of covid loans, retail figures, rate relief appeals denied, sustainable investment, international trade and more business news.
Staggering Scale of covid loans
HM Treasury figures show over 1.6m UK businesses borrowed more than £75bn through government-backed coronavirus lending schemes in the last year. The Bounce Back Scheme was accessed by more than 1.5m firms; the Coronavirus Business Interruption Loan Scheme (CBILS) has provided £23.3bn in financial support to more than 98,000 businesses; and £5.3bn in lending has been provided to 716 businesses through the Coronavirus Large Business Interruption Loan Scheme (CLBILS).
Meanwhile, the British Chambers of Commerce has alerted Downing Street to the high levels of debt taken on by businesses, with a recent poll finding more than a quarter described debts as unmanageable or “high and manageable”.
For those of that sell on credit, that should be another warning bell that it is essential to stay on top of our credit management.
Retail
UK Retail Sales rose 2.1% in February, recovering some ground from a steep fall in January. The Office for National Statistics said sales were still down by 3.7% on a year earlier, before the impact of the pandemic. Food and department stores benefited from essential retailers remaining open, it said, though clothing shops continued to struggle.
Online sales continued to grow and hit a record 36.1% of all UK sales.
Government sets aside £1.5bn of support as rates relief appeals denied
Thousands of companies are set to be refused business rates relief after the Treasury said it will legislate to “rule out” Covid-related business rates appeals. Instead the Government will provide a new £1.5bn pot of funding that will be distributed to sectors which have “suffered most economically” outside the retail, hospitality, and leisure sectors. The fund will be administered by local authorities, which will decide whether a business is eligible, and priority will be given to the worst-affected sectors.
UK bosses to invest in more sustainable initiatives
A PwC survey of UK chief executives reveals 70% are concerned about the impact of climate change, with almost a third “extremely concerned” about the issue. “Climate has become a fundamental business issue, and CEOs recognise they need to step up. Companies are starting to transform their business models, supply chains, products and services,” Kevin Ellis, PwC’s chairman and senior partner said. Some 60% of leaders plan to increase their investment in ESG initiatives over the next three years.
Rishi Sunak’s ‘super-deduction’ will benefit London twice as much as Yorkshire
A new report says the Government’s economic recovery policies will benefit the capital over the rest of the UK. The Centre for Progressive Policy (CPP) estimates that the ‘super-deduction’, which allows firms to claim a deduction from their tax bill if they invest in new equipment for their business, offers the greatest advantage to London – leading to a tax break per head of £512.89 in the capital but just £276.14 in Yorkshire and the Humber. Ben Franklin, Head of Research at CPP, says its analysis suggests the Government “has either failed to grasp the nature, scale and urgency of inclusive recovery or has given up on its own levelling up agenda.” A Treasury spokesman said: “We are totally committed to levelling up communities across the whole of the UK as we build back better.”
Sir Jon Thompson: Neds don’t get a free pass
The head of the Financial Reporting Council told an industry forum on Thursday that senior non-executive directors had complained about governance reforms that will see directors held responsible for a company’s accounts. Sir Jon Thompson said non-executive directors who did not believe they were responsible for running a company couldn’t pass the buck. He told an online event hosted by the ICAEW: “In law, you all run the company. You can’t simply turn up, take your fee, not do anything and say, ‘Well, it’s the chief executive’s fault.’ If you’re on the board, you’re on the audit committee, you have to take responsibility for the fact you’ve got obligations to the people who are investing in your company, or investing their pension money in your company.” The Times cites Roger Barker, head of policy at the Institute of Directors, who warns that if regula tions are too heavy-handed then bosses will not have enough left to strategise.
International trade
Watch out for supply chain issues and rising prices for goods being shipped from Asia. Dislodging the container ship that is blocking the Suez Canal may take weeks, according to a salvage company trying to free it. The enormous vessel is preventing at least 230 ships from entering the waterway, through which 12% of the world’s trade passes. almost £300 million in goods an hour are being held up. Some ships are rerouting around Africa, a detour that adds over 9,000km to the journey. Shipping rates are surging.
KPMG hired to check coronavirus loans
The Government has brought in KPMG to check over billions of pounds of government-backed loans to ensure that lenders have complied with the rules. The move comes after it emerged that Greensill, a collapsed supply chain financier accredited for two of the schemes, may have the Government guarantee on £400m of loans removed. Separately, Labour is calling on the Cabinet Secretary to investigate “serious concerns” about David Cameron’s efforts to lobby Whitehall officials on behalf of the collapsed lender.
Sunak planning to hit self-employed with tax hike
The i reports that Treasury sources have indicated the Chancellor “is minded” to bring NICs for self-employed in line with payments made by employed staff. They said: “The Chancellor believes tax and National Insurance payments should be fair for all earners, and levelling up the National Insurance bands is being considered as one way of doing that.” Nimesh Shah, a partner Blick Rothenberg, suggested Rishi Sunak could make the change in his Autumn Statement, noting that the Government “has not been particularly sympathetic to the self-employed community. In recent years, successive governments have made no secret of their desire to increase taxes for the self-employed.”
EY warns of ‘financial cliff edge’ threatening listed British firms
Analysis by EY shows that between March 2020 and March this year, 63 UK listed companies issued at least their third profit warning within a 12-month period, which is almost double the 2019 total of 32. As many as one in five of these companies is likely to collapse into the hands of administrators within a year of the third warning. Once taxpayer-backed Government support comes to an end, the companies in jeopardy could face a “financial cliff edge,” EY warned.
U.S. Unemployment
U.S. Unemployment Claims fell to their lowest level since the start of the pandemic as the US economy rebounds. Initial claims for state unemployment benefits came in at 684k, down from 781k a week earlier, according to the US Labor Department. Claims are now at their lowest level since the middle of March last year and below the pre-pandemic high of 695k.
ITV
ITV said it had acquired a minority stake in what3words, an accessible location service, for £2 million. The deal, which included an option to invest a further £2 million, marked the ITV’s first investment under its a ‘Media for Equity’ programme that sees the company take stakes in early stage digital and direct-to-consumer businesses
Why should you become a CPA member!
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.
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When you see your money come in, you will be so glad you used CPA.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Get compensated for previous late payments
Have you been paid late by business customers in the last six years?
Maybe you no longer work with them. Under legislation, you are entitled to compensation you for those late payments you have suffered.
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Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.