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Government to pay 80% of wages, defers VAT, but worries remain for freelancers

Chancellor of the exchequer Rishi Sunak (pictured) has announced the government will pay up to 80% of the wages of individual UK workers to keep them in jobs as the Covid19 pandemic tightens its grip on the UK economy. 

Chancellor Sunak said the state would pay grants covering up to 80% of the salary of workers kept on by companies, equating up to a total of £2,500 per month. 

However, there has been little respite for freelancers who continue to feel the squeeze with no sign of further assistance. 

Chancellor Sunak went to say the government would be deferring the next quarter of VAT payments, the equivalent of a £30bn injection into the economy and is hoped will keep companies afloat. 

The events industry has essentially shut down in its entirety, leaving many businesses with the real possibility of going bust. The announcement of the wage support scheme and deferment of VAT payments will go some way to allay fears. 

As for the business loan interruption scheme, more details of how that will work will be forthcoming on Monday. the chancellor noted.

Lex Butler, chair of the Hotel Booking Agents Association (HBAA) welcomed what she called a “life belt” from government. She said: “With his financial support initiatives today (Friday), the Chancellor has thrown welcome life belts to every business in the hospitality and events industry to keep them afloat. But with so many on the verge of sinking, especially now that bars and restaurants are all ordered to close, it is vital that these funds reach the businesses urgently. It may be too late for some.” 

Jane Longhurst, chief executive of the Meetings Industry Association, also welcomed the “comprehensive package" as a result of the industry’s ongoing collective request for financial support for the business meetings and events sector. 

Longhurst issued caution, however, saying: “We continue to seek recognition for the struggles this sector is facing so, it was reassuring that this announcement covers all businesses. Despite the promises made, it remains unclear whether properties such as hotels and attractions are expected to continue without disruption to guests, staff and business." 

She added: “It is good news that the financial measures will include our sector for the next three months and safeguard the continued employment of our talented workforce."

Jane Pendlebury, CEO of the Hospitality Professionals Association (HOSPA) also welcomed the news, while accepting that a lockdown on hospitality businesses is effectively in place. She said: “As feared, more lockdown restrictions are now in place. However, as an industry we appreciate both the urgency and the need behind these measures. 

“A huge relief though is the Government’s promise to pay 80% of wages. One of the biggest fears amongst hospitality operators is how they can pay their non-working staff. These fears are now greatly allayed. 

“Given the need for flexible business models, this will enable operators to streamline their operations, allowing them to invite in only those that need to work, whilst still being able to pay their broader staff base; offering a bedrock of stability from which they can adapt their offering to work in the current circumstances. The Chancellor has provided a more definitive instruction – we now know the businesses that need to close – while offering significant wage assistance, a move that should serve to allow many hospitality businesses to stay afloat for longer in what are proving to be very rough seas.” 

However, the Association of Independent Professionals and the Self-Employed (IPSE), has warned that the government’s Covid19 response measures leave the self-employed “trailing far behind employees”.

Andy Chamberlain, director of Policy at IPSE said: “Despite unprecedented measures to support employees, the government has still left the self-employed trailing far behind.

“The government has done nowhere near enough to support the self-employed. In fact, instead of supporting freelancers to help them keep their businesses going, it is pushing the self-employed into the benefits system. Worse, in the benefits system, the amount of money available will simply not be enough to cover many freelancers’ costs.

“In this drastic and grave situation, we urge the Prime Minister and Chancellor to match the steps they have taken for employees and create a Temporary Income Protection Fund for the self-employed. This should give a temporary, targeted cash injection to the freelance businesses that are struggling most – a financial boost to make up for lost income and keep them afloat.

“We urge the government to act on this and we urge anyone affected to sign our petition to make this happen.”

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