Chancellor warned his £5bn grants package for high streets will not be enough to save businesses

Business has warned that a £5bn package of restart grants announced by chancellor Rishi Sunak as part of his Budget will not be enough to ensure the survival of companies struggling to get back on their feet after the coronavirus crisis.

The money, to be confirmed in Mr Sunak’s 3 March statement, was welcomed by the Federation of Small Businesses as a “much-needed lifeline” for 700,000 high street businesses like shops, pubs, bars, restaurants and hairdressers, which have been forced to remain closed for much of the past year.

But FSB chair Mike Cherry warned that more money was needed to help the supply chain, as well as businesses outside the retail, hospitality and leisure sectors which are experiencing “real pain”.

Under Mr Sunak’s plan, non-essential retailers, due to reopen from 12 April at the earliest, will be entitled to “restart grants” worth up to £6,000 per premises. And hospitality venues, hotels, gyms and personal care and leisure firms, which must wait longer to return to normal operations, will be eligible for as much as £18,000 each.

Local authorities will be tasked with distributing the grants and will receive the funding in April.

The chancellor said the scheme will “ensure our high streets can open their doors with optimism” as the roadmap lifts restrictions, offering “light at the end of the tunnel”.

And he told Sky News’s Sophy Ridge on Sunday: “We’ve put in place this grant scheme – the restart grants – because businesses that have been forced to close multiple times over the past year actually employ millions of people and what I care about is protecting as many jobs as possible by supporting those businesses to protect those jobs. That’s what this grant will do.”

Mr Cherry said:“It is an extremely challenging time for small businesses who have fought tooth and nail to stay afloat in the last year, so we are pleased that our calls for further cash grant support will be heeded.

“This money – £5bn for 700,000 businesses – is a significant cash injection for non-essential retail, pubs, bars, restaurants, gyms, hairdressers and beauty salons. It will provide a much-needed lifeline, offering firms some reassurance as we look to put lockdowns behind us and focus on a vaccine-fuelled recovery.”

But he said it was “disappointing” that councils were being given discretionary powers on only five per cent of the cash, making it more difficult for them to assist firms outside the priority categories or retail, hospitality and leisure, even though they employ more than half of furloughed workers. And he said that assistance was needed for the many businesses excluded from financial support during the crisis.

“Councils must also prioritise issuing their grants,” he added. “Government figures show that only 13 per cent of existing funds given to them by the Treasury in mid-November had reached businesses by mid-January. They must increase the speed at which they get the money they do have out the door and into businesses’ bank accounts.”

The UKHospitality trade body welcomed the plan, saying many firms are “struggling to see how they could survive through” Boris Johnson’s roadmap for reopening, with laws on social distancing set to continue until at least 21 June – the earliest date when nightclubs will be considered for reopening.

But chief executive Kate Nicholls said the grants must form part of a wider package that includes an extension to the reduced VAT rate and a business rates holiday.

“Without these measures, and full furlough while we reopen, the hospitality sector’s recovery will be stunted along with our ability to start tackling unemployment by creating jobs,” she warned.

British Retail Consortium chief executive Helen Dickinson said that while the restart grants represented “a vital injection of funding during this extremely challenging period”, they will provide only “temporary relief”.

She called for an extension to the moratorium on aggressive rent enforcement and to the business rates relief in the Budget.

Liberal Democrat Treasury spokesperson Christine Jardine described the £5bn grants package as an “insult” and said that “considerable amounts more” would be needed to save up to 1 million businesses which are fighting for survival. 

“From beauticians to builders, florists to cafe owners, the small businesses in our communities are on the brink and the chancellor must do more,” said Ms Jardine.

“It is now or never to save a million businesses in our local communities and the government must put their recovery first.

“We need to see a budget with a bold and ambitious compensation package for those who are facing crippling losses, and coping with hardship through no fault of their own.

“And we must see those who have been left out in the cold, with no financial help, brought under the umbrella of government support.