If they don’t act, then businesses that have just got back to work and are starting to get income flowing again will fail, and that would be a disaster. The major risk to the economy is the uncertainty that the threat of local lockdowns could bring, including nervousness about taking on employees, breach of contracts in the supply chain and cash-flow management. Preventative measures that instil business and consumer confidence are extremely important to complement non-financial prevention such as ‘track and trace’.
As we move into the next phase of measures to prevent or contain local outbreaks businesses will be impacted, either because they are required to close their doors because of an outbreak at the workplace, or because the local area is placed into short-term lockdown.
A local lockdown business fund that is administered by local authorities with help from the Government can be used to ensure that small and medium businesses, who have played by the rules, can get means-tested support. This relief should be designed to ensure that businesses in the most exposed sectors, such as hospitality, can reopen with confidence because they can rely on support in the event of a local lockdown outside of their control. Means testing by local authorities means that the Government can be more confident that the scheme is not open to abuse and awarded to genuinely local businesses that have complied with the regulations throughout.
The Government has paid out billions in support for businesses and local authorities have had their budgets decimated, but if some sort of funding is not put in place the Government’s earlier investment will be totally wasted and firms that have played by the rules will be left behind.
Most people are acutely aware of the damage a second wave of the virus could do the economy shown by the significant economic downturn caused by the first one. The Government’s focus has been on reopening the economy, as it is not possible to continue to spend significant sums on an indefinite basis. However, business and consumer confidence are crucial in preventing further economic decline and therefore measures need to be put in place to protect local businesses.
This Scheme should be seen as a preventative measure, as more of the economy reopens local outbreaks are increasingly likely. Businesses need the confidence to know that they can expect support where they have tried to get their employees back to work in a safe way.