Recommendation 21

HM Government Acknowledged

Thank you for sending a copy of your recent report Economic impact of coronavirus: the challenges of recovery. This letter constitutes HM Treasury’s response on the broad range of issues mentioned in your report. Throughout this crisis, the government’s economic priority has been to protect people’s jobs and livelihoods. The government has spent over £200 billion to protect jobs and businesses. Since the publication of your report, the Prime Minister has announced new national restrictions that will prevent further spread of the virus. In response to these restrictions, the government is extending a generous and broad ranging support package for individuals and businesses. This includes: • Extending the Coronavirus Job Retention Scheme: The Coronavirus Job Retention Scheme (CJRS) has been extended until March 2021. The scheme operates on the same terms as the previous scheme and mirrors the levels of support available under the scheme in August–this means that the government will pay 80 per cent of wages up to a cap of £2,500 for hours not worked. Employers do not have to make any contribution to their employees’ wages for the hours not worked - they will only be asked to cover National Insurance and Employer pension contributions, which for the average claim accounts for just 5 per cent of total employment costs (or £70 per employee per month). • Support for self-employed: the government has provided more generous support to the self-employed. We are now increasing government support to the self- employed to an overall level of 80 per cent of average trading profits for the third SEISS grant, covering November 2020 to January 2021. The maximum grant will now increase to £7,500. The government has already announced that there will be a fourth SEISS grant covering February to April 2021. The government will set out further details, including the level of the fourth grant, in due course. • Support for local businesses in England: Businesses which are forced to close due to the new restrictions will receive up to £3,000 per month–this is worth over £1 billion a month under the new national restrictions and will benefit over 600,000 businesses. Businesses in the hospitality, leisure and accommodation sectors that have been suffering from reduced demand for a while will receive back dated grants at 70 per cent of the value of closed grants (up to £2,100 per month) for this period. We are also providing one-off funding of £1.1 billion to local authorities to further support businesses more broadly over the coming months. • Funding for Local Authorities: Up to £500 million will be provided to local councils for local public health initiatives, such as additional contact tracing, testing for hard-to-reach groups and communications. The Contain Outbreak Management Fund has already supported several English Upper Tier Local Authorities to fund local public health initiatives. Where necessary, they will have this funding topped up to a maximum of £8 per head of population. If they have not received any to date, they will be entitled to the full £8 per head. • We are also providing additional funding to local authorities to support the Clinically Extremely Vulnerable now that revised guidance is in place nationally. Funding will be provided of up to £14.60 per Clinically Extremely Vulnerable person for the 28-day period that the restrictions are in force. We will review this funding after the 28-day period should the strictest guidance remain in place in any one area once that 28-day period is over. • Mortgage payment holidays: Mortgage payment holidays will continue to be available for homeowners. Borrowers who have been impacted by coronavirus and have not yet had a mortgage payment holiday will be entitled to a six-month holiday and those that have already started a mortgage payment holiday will be able to top up to a maximum of six months without this being recorded on their credit file. The FCA published draft guidance on 2 November with further details on the scheme, including how customers can continue to apply for this support. The FCA will also provide a similar extension for consumer credit products, such as personal loans and car finance. • Extension of our loan schemes: We have extended our loan schemes–the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme, Coronavirus Large Business Interruption Loan Scheme and the Future Fund–to the end of January 2021. We will also adjust the Bounce Back Loan Scheme rules to allow those businesses who have taken out less than their maximum (i.e. less than 25 per cent of their turnover) to top-up their existing loan. Businesses will be able to take up this option from next week; they can make use of this option once. • Even prior to the extension, over 1 million businesses had been supported by the Bounce Back Loan Scheme, many of which have not previously taken out finance. The government has always been clear that these are loans, not grants, but it