Firms seek more support, as changes to furlough and business rates come in from July

·3-min read
A number of retail and hospitality face higher costs from July 2021 (Getty Images)
A number of retail and hospitality face higher costs from July 2021 (Getty Images)

Retail and hospitality firms have made the case for some business support measures to be extended beyond this month, after ‘freedom day’ was delayed.

Pleas for more support come ahead of July 1 when a cocktail of headwinds will hit businesses. That includes a 100% rates holiday ending, and employers contributing to furlough costs.

In addition firms will have to start paying any VAT deferred from last year.

However, the tapering off of government support comes despite a delay to the lockdown easing plan until July 19. That means social distancing measures are still in place which could limit customer numbers.

The Federation of Small Businesses’ Mike Cherry recently warned: “Unless the Government acts now, it risks a serious economic flashpoint this Thursday – a moment at which financial support starts to wind down, further trade changes take effect and repayments on emergency loans start to fall due. “

On furlough, the government contribution goes to 70% from 80% with effect from July 1. The contribution falls to 60% for August and September. More details are here.

Pauline van Brakel, chief product officer at money app Yolt, said: “The changes to the furlough scheme due to come into effect will make it more expensive for employers to furlough workers, and as a result could understandably cause concern for those still using the scheme. Despite the fact many restrictions have lifted, and things feel like we may be returning to some normality, we know that many continue to receive government support.”

Looking at business rates, the holiday is reduced from 100% to 66%. The 15 month holiday during the pandemic helped firms in the capital collectively save close to £3.5 billion, according to rates expert Altus Group.

Mark Selby, the boss of restaurant chain Wahaca, said: “The fact remains that hospitality and retail businesses alike will continue to suffer in the short to medium term as a result of reduced footfall. With city centre locations in particular being affected by a lack of both commuters and tourists, it is vital that the government acts to compensate for the delays in easing restrictions by providing an extension of business rates relief.”

Patrick Frawley, founder of the East London Pub Co, said: “Extended restrictions continue to hamper businesses in London when offices are still largely closed and tourists are non existent.”

Earlier this week UKHospitality’s Kate Nicholls said an immediate extension of the business rates holiday would settle some commercial concerns “but we would still then face employment costs that threaten jobs”.

Paddy Lillis, Usdaw general secretary, said the union is “deeply concerned that full business rates relief ends today, leading to additional cost pressures that could push many non-food retailers to scale back, cut jobs or collapse completely”.

Usdaw wants to see the business rates holiday at 100% extended.

A government spokesman said: “We deliberately went long with our support to provide certainty to people and businesses over the summer, and that support, which is a substantial amount of funding, is continuing.”

“The furlough scheme is in place until September and is amongst the most generous schemes in the world – already providing £65 billion of support and protecting 11.5 million jobs. The government will continue to pay 70% of workers’ wages over July, with businesses asked to cover just 10%.”

He also pointed to restart grants worth up to £18,000 per business, and business rates relief and a cut to VAT, both in place until March next year.

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