Coronavirus: What financial support is the government offering to individuals and businesses?

Anyone who cannot pay their mortgage due to Covid-19 will get a 3-month repayment holiday; retail and hospitality businesses get rate relief and grants of up to £25,000

Six days after Rishi Sunak unveiled £12bn of support to help the economy through the coronavirus outbreak, hailing it as “one of the most comprehensive responses of any government anywhere in the world”, he was announcing something 30 times bigger.

The exponential growth curve of people infected by the virus has been replicated in the government’s fiscal response and it is likely to expand further, perhaps in a matter of days.

The chancellor unveiled £330bn of government-backed loans made available to businesses big and small to help them through the upheaval - equivalent to £5,000 for every person in the country.

• Read More: What loans, grants, tax relief and other support are available to UK businesses during coronavirus outbreak?

On top of that, anyone who cannot pay their mortgage because of the virus will be allowed a three-month repayment holiday.

There was a further £20bn in the form of grants and tax breaks for firms which, the government hopes, will keep businesses trading and workers in their jobs.

While much of the detail is yet to be developed, some aspects of this unprecedented intervention are now known and the ultimate message of reassurance was delivered loud and clear.

If more money is needed, it will be found, the chancellor said on Tuesday: “We will do whatever it takes”.

Individuals

Anyone struggling with mortgage payments as a result of coronavirus because, for example, they are off work and on statutory sick pay, will get a three-month repayment holiday.

The chancellor did not lay out any specific measures to help renters but did make it clear that the government is keen to protect jobs and will “go much further to support people’s financial security”.

On the key issue of how to pay wages, details are to be hammered out with unions and companies in the next few days. He hinted that there may be direct government financial support to prevent companies laying people off.

The government will look at ideas that have already been developed elsewhere, he said, not look to invent something from scratch.

It may well look across the Channel to many countries in mainland Europe that pay unemployment benefits as a proportion of a person’s previous salary rather than the flat (and relatively low) rates paid here.

That results in a higher up-front burden on the public purse but it means the loss of a job is not compounded by a sharp drop-off in people’s spending power which ultimately hurts the economy.

Denmark went a stage further on Sunday, offering to pay 75 per cent of the wages of private-sector employees at risk of redundancy because of the coronavirus.

The Institute for Fiscal Studies suggested that the UK government could create a mechanism for shifting people laid off by companies that are badly hurt by the pandemic (like pubs) into industries that benefit (like couriers). Employees would then be able to move back to their old job once conditions allow.

To an extent the market is already facilitating the first part of this shift. Amazon announced this week that it needed another 100,000 staff to deal with increased demand and reached out to hospitality workers who have lost their jobs because of Covid-19.

£330bn of loans

Businesses will be able to take advantage of £330bn of government-backed loans - 15 per cent of the UK's GDP - via two schemes, one for large firms, one for small and medium-sized ones.

The chancellor said he wanted SMEs to be able to go into their bank from next week and take out a "coronavirus business interruption loan". The loans will be “low cost” with no interest payments for the first six months.

Companies will be able to apply for a loan of up to £5m, a big increase on the £1.2m promised in the Budget last week.

This will undoubtedly keep some firms in business and their employees in work but ultimately these are loans that will be have to be paid back. There are some firms who will make the calculation that, given the precipitous drop-off in trade they face, it still is not worth continuing. There will be pressure to turn some of the £330bn of loan guarantees into direct cash payments or further tax relief.

There is likely to be more to come from the chancellor who will be given new legal powers to deliver whatever financial support the government thinks is needed to deal with the crisis.

Airlines, pubs, bars

Airlines, pubs, bars and hotels are among the businesses that have warned they could collapse in weeks as trade dries up and cash runs out as a direct result of the virus and the social distancing measures implemented by the government.

There was little for airlines other than a promise that sector-specific talks would be held in the coming days in the hopes of coming to a solution. Last weekend they called for a £7.5bn bailout. Don't be surprised if that figure swells further.

All shops, pubs, restaurants and other leisure businesses will not have to pay business rates for a year under the new plans. Companies with a rateable value (a measure of property values) of up to £51,000 will be able to apply for grants of up to £25,000 to help cover their immediate cash-flow problems.

The smallest firms, who currently do not pay business rates, can apply for a grant of up to £10,000.

In total this amounts to an estimated £20bn of direct financial support that does not have to be paid back.

That might leave manufacturers, who face a different but similarly difficult set of problems, wondering where their support is.

Companies who have insurance for pandemics will be covered for losses suffered as a result of measures taken by the government to stop the spread of covid-19. That will come as relief for some pubs and bars but many do not have cover for pandemics in any case.