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Accountants question whether targeted Sunak scheme will protect jobs in hardest-hit sectors

PUBLISHED: 10:47 12 October 2020 | UPDATED: 11:26 12 October 2020

While Rishi Sunak's latest scheme may help those in the hospitality industry, what about those businesses serving the sector, asks Lovewell Blake's James Shipp  Picture: GETTY IMAGES/ISTOCKPHOTO

While Rishi Sunak's latest scheme may help those in the hospitality industry, what about those businesses serving the sector, asks Lovewell Blake's James Shipp Picture: GETTY IMAGES/ISTOCKPHOTO

Getty Images/iStockphoto

East Anglian accountancy experts have questioned whether chancellor Rishi Sunak’s targeted scheme to help employers hit by the latest wave of coronavirus lockdown will work.

James Shipp, partner at accountants Lovewell Blake  Picture: LEE BLANCHFLOWERJames Shipp, partner at accountants Lovewell Blake Picture: LEE BLANCHFLOWER

James Shipp, a partner at East Anglian accounts Lovewell Blake said while the support for businesses forced to close because of localised shutdowns was welcome, there were “many unanswered questions”.

“There remain many questions about how it will work in practice, and whether it will be successful in protecting jobs in sectors which have taken the hardest hammering during the pandemic,” he said.

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On Friday, October 9, Mr Sunak said government would foot two-thirds of the wage bill for employees in businesses forced to close. Larger employers will have to pay national insurance contributions amounting to around 5% of wages.

“Importantly, small employers will not be asked to make any contribution, which is vital given that they will not be trading in such circumstances,” said Mr Shipp.

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“Equally helpful is the £3,000 per month business grant, which will at least help smaller businesses keep up with the rent, which in most cases is the single bill which can’t be deferred – unlike VAT, business rates and corporation tax.”

Mr Sunak appears to have been responding to a call from the hospitality sector for targeted support but there were “significant uncertainties” about the scheme, he said.

“Will it apply to those sectors which were never allowed to re-open, such a night clubs? Or will it only apply to businesses forced to close their doors in specific local areas?” he asked.

“And what about supply chains? Clearly a restaurant which is told to shut its doors will be eligible for the scheme. But for every such business, there are half a dozen others which are entirely dependent on the sector – are these businesses to be left to their own devices?”

The potential for job losses from those “second tier” businesses dependent on hospitality business could be greater than the number the chancellor’s scheme saves by helping that first tier, he pointed out.

With more stringent restrictions looming as infection levels climb, the targeted help announced by Mr Sunak was “an obvious route to take”, he said, adding: “Employers in affected sectors will be breathing a sigh of relief.”


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