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England joins rest of UK in national lockdown — but uncertainty continues

Confirmation that England will join Scotland, Wales and Northern Ireland in a second national lockdown means new restrictions on business and movement will start from November 5 and run for at least four weeks.

Under the rules, people in England will only be allowed to leave home for limited reasons, including accessing childcare or education if it is not provided online, to work if it cannot be done from home, for exercise, medical appointments and to provide or receive care.

From Monday November 2, Scotland has also increased its restrictions, replacing measures that have been in place since October 9 with a new five-level system of coronavirus restrictions.

Meanwhile Wales’ so-called firebreak introduced on October 23, should cease on November 9, while a four-week partial lockdown began in Northern Ireland on October 14.

The English lockdown will see non-essential retail close, along with leisure facilities, bars and restaurants (except for takeaway) and hair or beauty salons. Schools, colleges and universities will remain open.

While the rules are relatively simple, they come against a backdrop of other changes affecting businesses right across the UK.

Britain’s furlough scheme – more properly known as the Coronavirus Job Retention Scheme or CJRS – was due to end in October. within hours of the lockdown commencing on November 5, however, Chancellor Rishi Sunak confirmed the furlough scheme would now run until March (although it remains unclear whether it might be extended for devolved countries still in lockdown after that time).

Under this revision of the scheme, the government pays 80% of normal pay for those on furlough, and employers pay about National Insurance and pension contributions, equivalent to a payroll cost of c5%.

Like with the latest iteration of CJRS, employers can take furloughed workers back part-time, and employees can be furloughed for a period as short as seven days.

Once the scheme ends, a new program – the Job Support Scheme (JSS) – is due to begin, but it is not yet clear if this will undergo further changes.

Had it started in November as forecast, the JSS would have covered a portion of wages for businesses either open but operating at reduced hours or closed due to health protection regulations.

What does the raft of changes announced in the past few days mean for British business? Nigel Morris, an Employment Tax Director with MHA MacIntyre Hudson, and Clair Williams, a Senior Employment Tax Manager with MHA Tait Walker, give some insight into the challenges facing clients.

Nigel, the English lockdown comes after several weeks of fractious debate over restrictions and support in different parts of the UK, including the north of England, which were facing tough limits on business activity without the more generous support on offer now. How do your clients see these new changes?

Nigel: A lot of my clients don’t see, from a corporate perspective, that a lockdown is necessarily good news for them. Whichever sector you’re in, this is a challenge. If you’re in hospitality, then it’s a real kick because we had a bit of a bounce in the summer, and this puts a lot of uncertainty around Christmas for the hospitality and leisure sector. If you are in the non-essential retail sector, you might only be able to open potentially from mid-December before Christmas and that doesn’t give you a lot of time. It will wipe out November and December if you’re not careful. And of course if we need to lockdown over Christmas, that will have an enormous impact across the board emotionally. It’s been an intense and difficult time for businesses in every sector, as they try to rationalise, consider lay-offs, reconsider pay. It’s going to be difficult for some time to come.

Are the challenges posed by this lockdown greater than the previous lockdown in March and April?

The lockdown itself is nice and simple and we have been through this before. But the tricky elements are the time of year, what it means to be reopening in December and the run-up to Christmas, and then to close again for the New Year, and also the mix of restrictions across the UK.

Furlough is actually a UK-wide scheme, but England is in a four-week lockdown, Wales is coming off the back of a two-week firebreak, Northern Ireland has a lot of restrictions and Scotland is trying hard to align with what’s happening elsewhere in the UK. It really is tricky when you then have political commentary on top of that about whether a furlough scheme might apply elsewhere beyond the English lockdown. Things are complicated enough. I think what business really wants is to have some space to plan, which is hard when there are so many changes.

Clair, you are based in Newcastle and have seen the fight by mayors in the north of England to secure additional funding for areas that have been under at least partial restrictions for many weeks. Only last week, the best offer for Greater Manchester was a grudging 67% for wages but now the rest of England will enter lockdown, the support across the country will be back up to 80%. What have your clients thought about this argument?

Where I am we have been in Tier 2 not knowing if we would need to go to Tier 3. At least there is some certainty around the country-wide lockdown as business owners no longer have the worry that within two or three days they may suddenly have to close the business.

That’s what’s been really difficult for businesses and it has been constant, will we go to Tier 3, will we stay at Tier 2 – no one could plan properly. At least now we know for a month where we stand.

Certainly, the extension to the CJRS here at the 80% rate is very welcome news for people, but it feels a bit backhanded in the north as you can see from the commentary. As I keep saying to my clients, though, it’s better than what we were going to have.

Is it possible to predict life beyond the lockdown at this stage?

Clair: It is a constantly changing environment that we’re in, and nobody can plan for any of it. It becomes very difficult for business owners to be comfortable with the business plans that they have developed, and they can’t just turn around and rework everything overnight. Unfortunately, business owners have to plan for several “potential” scenarios knowing that some of them will never happen. The Government can introduce changes on the 5th of November, backdate it to the 1st of November, or announce new rules on a Friday night for something that needs to be done by the following Monday. Businesses just can’t work that way.

Nigel: The support the government is giving has been great, but the criticism – and I think it is a fair criticism – is that at this point in time we should be learning from what happened with the furlough scheme back in March and April. That scheme went through a dozen or more changes through its life and it was very tricky for businesses to keep on top of it. It was designed from the perspective of advisors who looked at issues of compliance and fraud but had absolutely no idea how payroll worked and that made it very difficult to administer.

What we can see now in the design of some of the new arrangements, particularly the JSS, which has obviously been deferred until after the extension of CJRS finishes, is that could also be very problematic. It was predicated on there being some level of business activity as opposed to furlough, in which if there’s no activity you still get some money. If you’re in an area that is one tier below lockdown, you might have your activity diminished because people aren’t venturing out, footfall drops, but under the JSS the support for businesses in terms of wages would be lower. As a corporate that would be the worst of all worlds because you don’t benefit from the support available for lockdown, while still being expected to trade on with limited activity.

What we need now is as Clair mentioned, is some certainty around planning. The government needs to stop and step back and look at furlough and JSS and say, right, there are only a finite number of scenarios that can happen between now and the end of April. Let’s bolt down now what our support is going to look like under each of those various scenarios, and provide some clear guidance for business based on those.

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