Shrewsbury MP Daniel Kawczynski calls on PM for clarity over coronavirus help

Here is Mr Kawczynski's letter in full:

"Dear Prime Minister,

Two days ago, the government set out a very welcome series of financial measures on top of the Budget to combat the detrimental economic affects we are seeing as a result of COVID 19. The Chancellor announced that government backed, and guaranteed loans will be introduced. He stated that £330 billion will be introduced in guarantees, which is roughly 15% of the GDP.

The measures as laid out are very significant and should be beneficial to many during this national crisis, yet there are still many factors that remain to be addressed.

One of my constituents wrote to me with the following, which I think is a good message for us all to consider: “‘Whatever it takes’ is a great slogan and is very comforting. Now we need the simple processes to deliver, and quickly.”

I have gathered my comments into three themes:

1. Support for individuals and very small businesses

It is crucial in this crisis that every single person can receive the help regardless of their circumstances. The main issue is confusion of who is eligible for certain types of loans and whether it be guaranteed that the amount promised will be utilised for all those in need, not just those in certain categories.

• Those in the retail, hospitality or leisure industries who do not have a policy that covers pandemics, and have a rateable value of between £15,000 and £51,000 will have access to a cash grant of up to £25,000, but what about those who need more than this to sustain them through this crisis?

• 700,000 of our smallest businesses can receive up to £10,000 up from £3,000 in cash grants, announced in the Budget, but is the support available to businesses who do not pay business rates? Many smaller businesses rent serviced officed inclusive of business rates. This means the landlord pays the business rates collectively on the whole property collecting this through increased commercial rents. The council would only have one bill for the entire property. In this case, the tenant is not a business rate payer and cannot access the grant yet the landlord would get the grant.

• For those individuals, who might have difficulties due to the pandemic, a 3 months mortgage holiday is now introduced, can you confirm this will be extended as required, should the outbreak continue for longer?

• You also say that those individuals who are in need of urgent help should go to their local authorities which can provide support through various schemes. These authorities are seeing a surge in demand and reduction in staffing due to self isolation. How are all the grants, benefits etc going to be processed and paid, if there are no staff to do it?

• In general, we can also see that many of these measures are only short-term which will not be sufficient enough. Considering the scale of this virus, we are likely to need long term measures as regardless of the length of the virus, the economic impact will indeed be long term.

• For firms that do have insurance provision, insurers are still not activating policies on the basis that the UK Government has not mandated closure of certain sectors, or buildings; merely advising citizens to avoid. This message is not clear and leaves firms stuck in the middle with demand all but evaporated and insurers refusing to pay.

2. Support for SMEs and Larger Businesses - Speed and detail for the financial package.

The financial support for SME and larger companies needs to be there this week not next month. Committing a £330bn underwrite is an almost unimaginable step-up compared to “business as usual” for the Civil Service. We need our brilliant civil servants supported by Ministers with the courage and leadership to “cut through” to take risks to get things done. Business leaders of otherwise healthy and viable companies are looking at evaporating order books and devastated supply-chains so are facing horrifying cash and profit forecasts for (at least) the next quarter. March payroll is due next week, and VAT payments are due on 7 th May.

Without a degree of confidence, managers will have to cut staff now in direct conflict with the advice from the Chair of the Bank of England. Of course they want to keep the staff and not do structural damage to their businesses, however without (i) clarity and (ii) a route to cash then they will have to make the cuts.

Although the Coronavirus Business Interruption Loan Scheme could be a helpful tool in the mid-term, this will take too long (including applications, assessments, approvals and governance) and is too uncertain to provide the necessary confidence.

HMRC could be used to deploy direct financial assistance:

The only body with an existing relationship with all UK companies is HMRC. An equivalent of “helicopter money” to provide immediate help to companies would be for HMRC to

simply inject a sum equivalent to the last 12 months of PAYE receipts for each SME. (This assumes six months of disruption due to COVID19). It would be in the form of a loan (with standardised and non-penalising terms) and, if a company chose not to accept this loan they could simply return it on the following month.

In view of the trading losses (and eroded margins) which are already feeding through as contracts are suspended and cancelled and as supply chains falter, Government must be realistic about the scale of default on such loans.

3. Global support for Industrial Sectors

Many industrial sectors are led by Global Blue Chip companies that sit at the top of the food and supply chain. When they wobble the whole supply chain collapses with ramifications across the world. These industrial sectors need comfort (from G7 or, better, G20 leaders) that the Globe is united in doing what it takes to provide support and, within the bounds of what is currently possible, continue with business as usual.

I hope we can all work together and provide some confidence, clarity and tangible, early assistance to people

Your sincerely,

Daniel Kawczynski."