Public Policy

March 26, 2020

Daily Covid-19 Brief: Thursday, March 26

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Each day, our Public Policy team will be reporting on the latest news in the evolving situation. To view the previous day’s summary, please click here.

Chancellor Rishi Sunak has announced a new financial aid package for struggling self-employed workers

  • The Chancellor has announced a new self-employed income support scheme which will run for three months.
    • The government will pay self-employed people a taxable grant based on their previous earnings over the last three years, worth up to 80% of earnings, and capped at £2,500 a month.
    • The scheme will be open to those already in self-employment who earn the majority of their income through their self-employed work and with trading profits of up to £50,000.
    • To avoid fraud, it will only be open to people who have a tax return from 2019.
    • Sunak claimed that the programme will be up and running no later than June and said that 95% of the self-employed will be covered.
    • Anyone who missed the deadline for their tax return will get an extra four weeks.
    • Sunak also announced that a greater number of self-employed people will also be eligible to apply for universal credit.

Banks have been criticised by the Chancellor, firms and MPs for asking business owners to put their own property up to secure loans

  • Banks are under pressure to change the terms for government-backed loans so that business owners are not personally on the hook for losses.
    • Under the “coronavirus business interruption loan” the government will cover lenders for 80 per cent of losses on £330bn of emergency business loans aimed at preventing an economic collapse caused by the coronavirus.
    • But firms have found when they apply to their bank for a “coronavirus business interruption loan” the small print says they must provide personal guarantees, meaning they may have to hand over their savings or assets if they can’t repay the debt.
    • The chancellor has warned banks to “play their part” and ensure the benefits of the support set out by the government and the Bank of England are passed through to businesses and consumers.
    • The chancellor, the Bank of England governor and the head of the Financial Conduct Authority wrote to the CEOs of the major banks on 25 March to emphasise this point.
    • Royal Bank of Scotland, which owns NatWest and is itself mostly owned by the Treasury, is the only major high street lender so far to have said it won’t demand personal guarantees.
    • An PM’s spokesperson said: “Just as a statement of fact, the lender is not allowed to take a guarantee against a borrower’s home, i.e. their principal residence under the business interruption loans scheme.”
    • The PM spokesperson also warned that “The Bank of England and the FCA will be monitoring the situation closely and will be in regular contact to discuss developments and issues emerging.”

The Home Office has revealed the new powers police will have to enforce the new social distancing rules

  • Police will now have the power to arrest anyone who continue to break coronavirus lockdown rules.
  • Police officers can also tell them to go home, leave or disperse within an area, and ensure parents are taking necessary steps to stop their children breaking the law.
  • Those who refuse to comply could be issued with a fixed penalty notice of £60, which will be lowered to £30 if paid within 14 days.
  • Second-time offenders could be issued a fixed penalty notice of £120, doubling on each further repeat offence.
  • It means that people who repeatedly flout the rules could face fines up to £960.
  • Those who do not pay the penalty can be taken to court, with magistrates able to impose unlimited fines.

Other UK COVID 19 news 

  • Emergency legislation rushed into law on 25 March will make an additional £266bn available for Whitehall departments to spend on “contingencies” over the coming months without getting advance approval from parliament.
  • UK companies have been given an extra two months to publish their results as financial regulators enact a string of measures to help them weather the current “extraordinary circumstances”.
  • Supermarkets have been given access to a government database to help them prioritise food delivery for elderly and vulnerable shoppers ordered to stay at home by the government. Sainsbury’s and Waitrose said they would write to existing online customers also on the database to offer them a delivery slot.
  • London Southend airport is closing almost all of its operations – remaining open for just 15 hours a week.
  • The first flight chartered by the UK government from Peru – carrying more than 200 stranded Britons – has arrived at Heathrow. Foreign Secretary Dominic Raab said more flights are likely “in the coming days” as negotiations continue with the Peruvian authorities.
  • Cabinet Office Secretary Michael Gove outlined that the first meeting of the Withdrawal Agreement Joint Committee will take place on 30 March by remote means due to the COVID-19 crisis. The European Commission will be represented by Vice-President Maroš Šefčovič.
  • The government has extended its target for volunteers to help the NHS to 750,000, after 560,000 people signed up in less than 48 hours.
  • Probation officers in England and Wales are scaling back supervision of criminals by asking them to come to their windows for monitoring rather than meeting face to face.
  • The government has announced that all NHS workers and social care staff will be given free parking during the COVID 19 outbreak.
  • The government has announced that another £210m to international effort to find vaccine. Downing Street says it’s the largest single contribution by any country to the fund – and comes on top of £40m already pledged. It will go to the Coalition for Epidemic Preparedness Innovations, and will help scientists and researchers to accelerate their work.
  • The Scottish government has pledged to pay bus companies the amount of funding projected in this year’s budget regardless of the number of passengers who use services. Under the current agreement, Transport Scotland reimburses bus firms for travel under the concessionary scheme for over-60s and disabled people. Bus operators will now be able to access the £260 million available to support the concessionary scheme and bus service operator grant payments.

Relevant world COVID 19 news 

  • The G20 nations have pledged to inject $5 trillion (£4tn) into the global economy to try to combat the fallout from the coronavirus pandemic. The announcement came at the end of a virtual summit hosted by Saudi Arabia.
  • At the G20 the leaders also promised to “expand manufacturing capacity to meet the increasing needs for medical supplies and ensure these are made widely available, at an affordable price, on an equitable basis, where they are most needed and as quickly as possible”. They also promised to provide immediate resources to the WHO’s Covid-19 solidarity response fund, the Coalition for Epidemic Preparedness and Innovation and Gavi, the vaccine alliance, on a voluntary basis.
  • The UN’s food body has warned that protectionist measures by national governments during the coronavirus crisis could provoke food shortages around the world. Although harvests have been good, a shortage of field workers brought on by the virus crisis and a move towards protectionism – tariffs and export bans – mean problems could quickly appear in the coming weeks.

Company updates

  • Dyson have announced plans to make 15,000 medical ventilators, designed from scratch, in response to calls from the government to supply the NHS with necessary equipment.
  • The UK’s biggest mortgage lender Halifax has withdrawn many of its mortgages, saying it will no longer offer any mortgages with a “loan-to-value” (LTV) of more than 60%.
  • Airlines UK, the trade body for British based airlines, has called on the government to introduce a six-month suspension in air passenger duty, and waive air traffic control and related charges through the rest of 2020 in order to survive the crisis.
  • Pensions Investment Research Consultants, which advises shareholders including local authority pension funds, has called on UK firms to suspend executives bonuses this year in response to the Covid-19 crisis.
  • Dixons Carphone has reported a surge in online sales by 72% in the past three weeks, with laptops, games consoles and freezers particularly popular.
  • Intu, one of the UK’s biggest owners of shopping centre, has warned it will soon breach the terms on its debt commitments following a drastic fall in the rents received from its retail tenants.
  • According to economic analysis, Sky and BT could lose almost £1 billion in revenue if sport including Premier League football doesn’t return until August.
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