A tiny organism, tens of thousandths of a millimetre big is thought to have developed in a bat and has shattered our lives within a few weeks. Tragedy has befallen thousands of people, and thousands more will suffer similarly before this is over. While we lay-people study the statistics and get ever more confused, how good is the response by government so far?
We are all having to face decisions concerning our lives which have left us confused and feeling under-informed. The economic impact has already shaken us to the core, and it is only just at the beginning. The recovery will take years. This is a brief look at the good and the not-so-good in the response.
For up to date information on the Government financial assistance packages, visit Hillier Hopkins LLP Web Site.
Government Business Response
At the date of writing, the Chancellor’s announcements have been welcome if perhaps too light touch at the beginning. Starting in his Budget speech, the aid packages have increased several times and with one tricky exception (the Self-Employed), he has now put in place a raft of assistance which will help many businesses. I won’t repeat it all here, but refer to the Hillier Hopkins web site for more. HMRC’s Time to Pay helpline is efficient and very helpful, allowing deferred payments of VAT and PAYE. The Coronavirus Business Interruption Loan Scheme (CBILS) has been a little slow to get up and running but is helpful though in some cases may lead to future problems for borrowers.
CBILS provides up to 80% security on loans that are interest free for 12 months. Apart from some accounting anomalies that will be created by these, the main issue is that lenders will require that all existing security is used first. Businesses seeking to prop themselves up for the short term, but find that the return to normality is slow, might find themselves in difficulty when it comes to repayment. Once we come out the other side of the crisis, it is likely that society and business will look very different and demand in some sectors may fall while others increase. Bankers are responding responsibly so far. The CBILS story is yet to unfold.
The most welcome development came late last week when government agreed to underwrite 80% of wages of employees who are unable to work (up to £2,500 per month). It is rare to see any initiative universally applauded.
The notable and tricky exception is the self-employed, a term which includes a great variety of people at great variations in income. The public will not be overly sympathetic to some, especially those in the higher professions. Dentists come to mind. Unable to provide regular services, most are still providing emergency services, and are at enormous risk as they stare into people’s mouths from a couple of feet away. Their income has been decimated with little help from government. Maybe you won’t care, till you have a tooth ache.
Actors, tutors, plumbers, building contractors, painters and decorators, gardeners, cleaners, accountants and bookkeepers, lawyers, taxi-drivers and many more are often self-employed. Then there are the gig-economy zero-hours workers. All will see their income fall as the wheels of the economy grind to slow motion. All they have to protect them is an enhanced Universal Credit (increased by £1,000 but woefully inadequate). Their only comfort is that they can delay paying their self-assessment payment due on 31 July until 31 January next year (clarity is awaited).
Then there is a whole class of people who have been forced by tax rules to operate through companies. Changes to IR35 have been deferred, at least, but the people involved are neither employed nor self-employed. The focus of government has been to prevent workers being laid-off or made redundant, but in doing so they are not yet protecting the many who are being laid-off de facto, simply because the work is not there or because they are being told to stay at home.
It is essential that government finds ways to help all self-employed people who have varying income directly related from their day to day output, and who might otherwise be forced to try to carry on working to ensure their livelihood continues, thus damage the success of social-distancing.
The Day to Day Supply Chain
We can critique government in many ways, but overall, most are of the view that government is doing what it can to manage the economy and business continuity in a fairly competent fashion.
The same cannot be said of its keeping supplies of food and household goods going. It would not have taken a fortune-teller to have seen that, the moment the word “lockdown” entered our vocabulary, people would panic-buy. We can still remember the queues for petrol stations, with people keeping their cars topped up, when there was a fuel shortage.
Nothing instils fear into the public like shortages of basic supplies, and the supermarkets and government could easily have predicted what we are now experiencing. Empty shelves can’t be helping profits of supermarkets either.
As soon as there was any awareness of trouble, and that was back in January, we would have expected government to instruct the supermarkets to prepare. Mere reassurance is far from sufficient.
For those attempting to do as government asks, and stay at home, their day to day grocery needs will increase as they eat more at home and need more soap to wash frequently, as well as many other products. Seeing the shelves bare encourages people to go from shop to shop, undoing much of the good of isolation. Being unable to find a delivery slot or even a “click and collect” time makes people venture to the shops in vain.
The Prime Minister could not have been clearer today that people should stay at home as much as is possible. But if government wants to achieve this, then government must urgently find a solution to the supply problem. We are told there is no shortage of anything (except ventilators), and if that is the case, no effort should be spared to reintroduce confidence to the public that they will be able to cope quite nicely at home, by getting the shelves filled.
History will look back and judge us on how we behave and survive this pandemic. I have many emails from people expressing a variety of views on how government is doing, which I will not share because some might be upsetting. Others are very positive. What is clear to me is that despite a tragic death rate, which is not limited only to the old or sick, though they do represent the majority, the biggest impact of coronavirus is on society and the world economy. They will come back for sure, but they may be rather different when they do.
On the positive side, pollution is improving.