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Businesses face crunch point as support phases out

Posted on: 01/07/2021

Businesses in Dorset have been warned ‘we are not out of the woods yet’ as government Coronavirus support begins to wind down.

Dorset Chamber, the county’s leading business support organisation, states that there are more hard yards to cover on the road to a sustained recovery from the pandemic.

Its comments come as firms must start paying part of the cost of furlough as the Coronavirus Job Retention Scheme begins to taper off.

A holiday in business rates for the hard-pressed leisure, hospitality and retail sectors is also starting to be withdrawn while deferral of VAT payments came to an end on June 30.

Ian Girling, chief executive of the Dorset Chamber, said: “This is the first in a series of crunch points facing business.

“Dorset firms have coped admirably and whilst the signs are really encouraging for a sustained economy recovery but we are not there yet.

“The government has provided life support for business during the pandemic but now we are starting to see that switched off as VAT deferment ends, business rates relief phases out and the tapering of furlough begins.”

Ian added: “The rebuilding of cash reserves must be a priority for many businesses as support winds down further.

“The situation has not been helped by a lack of clarity from the government about exactly what the lifting of restrictions will look like on so-called Freedom Day on July 19.

“There has been lack of advance warning throughout the pandemic and some detailed guidance about what exactly will happen on July 19 would provide valuable certainty for businesses.

“There also remains a long-term need to support businesses, particularly those in the most hard-pressed sectors, as the impact of the pandemic will be felt well into the future.”

From July 1, the government started to pay 70 per cent of the wages of furloughed staff rather than 80 per cent. Employers now have to shoulder the remaining 10 per cent.

About 1.5m workers remain on furlough nationwide, according to the Office for National Statistics (ONS).

The government has spent £66bn on the scheme so far, supporting 11.2m jobs since March 2020, according to HM Revenue and Customs (HMRC).
The scheme tapers to a 60 per cent-20 per cent split from August and ends completely after September.

Business rates suspended during the pandemic for firms in hospitality, retail and leisure were reintroduced with 66 per cent relief on July 1 up to a maximum discount of £2m.

The scheme allowing deferral of VAT payments came to an end on June 30.
Dorset Chamber – the county’s voice of business – is providing ongoing guidance and advice for firms in the county.


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