As Politico reports this morning in an email (and I have edited for narrative flow):
Business Secretary Alok Sharma admitted to Sky's Sophy Ridge [this morning[ that only around 4,200 business interruption loans – amounting to just over £800 million – have been allocated so far to bail out firms devastated by the lockdown, despite reports of around 300,000 applications. He said he had been speaking with banks involved in the government scheme over the weekend, urging them to move faster.
So, that is a 1.4% success rate. That means less than £1 billion of the supposed £330 billion of support has been provided to this sector, so far. A worse outcome is hard to imagine.
But much worse could follow. Andrew Rawnsley in the Guardian attributes unnamed sources with reports that maybe 9 million people have now been furloughed and are no longer working. That's on top of the millions of others, formerly employed and self-employed, also out of work, most of whom have no money at all. It's quite likely that 40% of the UK's working population are not working right now.
And the real risk is that furloughed workers will be unemployed and not just furloughed very soon.
Their employers can, after all, only pay them if they have cash. Without support that is going to run out. Then two things happen. The furloughed worker is redundant, and so on benefits, with vastly reduced support. And they have no employer to return to when all this might be over.
I have been saying since 11 March that the government's reaction to this crisis has been far too limited, and was always mean and going to be delivered far to late. They have done badly on the medical aspect of it. But eventually their mishandling of the economy is going to wreak even more havoc. And over that they had a choice.
They could have given 100% guaranteed loans, as Germany has.
The loans could have been simple, and online, again as Germany's are.
They could have sped up the process of support for the self-employed, very easily instead of insisting the government has to work out who can claim what before anyone gets anything.
They could have supported employees with furloughed staff vastly quicker: simply canceling PAYE due in March and April would have helped.
But they chose not to do these things. And in the face of the crisis we face that was incompetent.
And we are all going to pay a horrible price for that incompetence.
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My employer hadn’t applied for the loan yet because there is apparently still no indication of what the loan rate will be after the first year interest free rate expires. We still have a few bills coming in plus all the usual outgoings to account for with no cash flow. It’s an insane situation to be in. My biggest fear is that the government will come out of lockdown earlier – utilising a manipulated death rate – and then remove any assistance as fast as it can. We did as we were asked, we shut our pubs – which is of course the correct thing to do – and the brewery is now shuttered but we are increasingly feeling – as I suspect other businesses are – that we are on our own. As we start to approach pay day – end of April – everyone is becoming increasingly nervous. I have been having frank discussions with my employer over the past weeks and he is determined to make no one redundant – we are a close knit firm – but we can’t hold out much longer. We are being punished for doing the right thing.
Karl
Your last comment is spot on
Good luck. I wish you did not need it
Richard
There was a Director of a small company in the Borders on Radio5 Live this morning making this point. He has put his staff on furlough, but if he doesn’t get the 80% grant through by the 28th of this month when his payroll runs, he has no money to cover the salaries, so will instead have to make them all redundant.
He also said that he had followed his accountants advice (and HMRC rules) and only paid himself a minimal wage, taking the rest in dividends, so was looking at 80% of not a large amount if he stuck himself on furlough.
Another interesting thing he said, was that there doesn’t appear to be any rules in the scheme that would stop him giving a payrise to his staff to 37.5k so he could give them the 2.5k max.
There is a rule that stops that, I can assure you….
Actually the gov have advised that they will only pay 80 % of the average wage bill for the past tax year prior to Feb28th ,so increasing the amount paid to the max after would not help in the least.
Well at that rate it will take 6 years to process the current applications. On a personal note no sign of either the £10k grant or progress on our Santander loan application.
Hang on in there,I got my £10 K small business rate relief last week,they are getting through them.All the councils now have the funding from the gov ,they just need to get these out.
And how long can you survive on £10k?
Richard,
Well along with the Gov Retention Scheme paying the majority of the wages probably about 12 months at a push months as I have a bit of a buffer too,it also depends on the amount of business kicking around after we are out of lock down, there may well be a mega rush initially then a quietening down. It’s really difficult to forecast, as all businesses are finding no doubt.
You’re going to be a survivor then
They may be rare
Richard,
Yes I am lucky and am coming towards the end of running my business.The gov help has been a lifeline for me and my staff,it is unprecendented in my experience,but it still will be not enough as you are trying to point out. We face very difficult years ahead.
I hope you had a nice Easter Sunday, Richard.
I noticed the thread we were debating on about the Bradbury Pound being a solution to this very grave financial crisis that we all find ourselves in has now been closed to further comments. https://www.taxresearch.org.uk/Blog/2020/04/09/on-sunday-the-bank-of-england/
With so many small and medium-sized businesses now staring into the abyss of going bust, and with the spectre of a severe recession – with all its attendant austerity measures that hit the weak and vulnerable in our society – increasing daily as the government is compelled to find/borrow up to £400 billion to stabilise the ship of state, could I please ask you this one very simple question?
Realising, as I do now, that you’re not a fan of this particular Treasury-controlled fiscal measure to mobilise the credit of our nation as debt-free and interest-free money, had you been an economist and government advisor on August 3rd 1914, would you have counselled David Lloyd George to go down the path of Treasury M0 at 100% (the Bradbury Pound) in order to stop the imminent run on the banks? If your answer is ‘no’, then please tell me what you would have advised him to do to immediately stop the growing panic.
I propose direct monetary funding (DMF) of government spending by central banks
I have done for a long time
That is new fiat money
My argument with you is that you do not realise that all you are asking for is more fiat money
Please just read the material and stop wasting my time and that of others
We may have needed notes in 1914
We definitely do not now
I’m sorry that you’ve changed the tone – I’m trying to keep things friendly and constructive.
Please let me refer you to this link on what fiat money actually is https://www.ig.com/uk/glossary-trading-terms/fiat-currency-definition. It says clearly: “Since it is not tied to a tangible asset, the value of fiat money is dependent on responsible fiscal policy and regulation by the government.”
The Bradbury Pound was based on the wealth and credit, not to mention the labour potential, of the nation. You can’t get something more tangible and stable than that. Treasury M0 at 100% is not, repeat not, fiat money. and it can take the form of both physical notes AND electronic money…that’s just common sense.
According to the Office of National Statistics, our nation’s net capital stock and human capital stock is now over £30 trillion. This means that our elected politicians (who are there to serve us, the people, and NOT the City of London and the private central bankers) can release the debt-free and interest-free amount of money that’s needed to ensure the security, prosperity and happiness of the entire nation. Think about what this would mean if only a fraction of that money was spent on our country — say just £1 trillion.
Immediately our government can release in a responsible way all the money that is needed to fully fund the NHS and those selfless individuals involved in social welfare who look after the elderly and the vulnerable in our society. It means that all of our young people can enjoy a free and well-resourced education. It means that our police and armed services will be able to do what’s expected of them — real community policing to keep crime off our streets and real defence to protect our sovereignty from those wishing us harm. It means building decent homes for everyone. It means having the resources needed to repair the ecological damage to our countryside whilst ensuring extensive organic farming to feed the nation healthily. It means protecting our strategic industries like steel and ship-building from the same corporate mind-set that wants to privatise and globalise our national assets. And it also means mitigating against the worst effects of climate change by ensuring proper and well-funded coastal protection and flood management schemes. And all of this whilst removing a complex and invasive direct taxation system which exists only to control us in an increasingly Orwellian way.
And if every country in the world fully embraced this simple and common sense fiscal arrangement of Sovereign National Credit, economic migration would come to an end — nobody wants to move away from where they were born and brought up if there is already a good standard of living along with real prospects for a life of prosperity and happiness in an ecologically stable environment.
I’m just so sorry that you still persist, as does Positive Money and the New Economics Foundation, in giving the privately controlled central banking system a role in providing the liquidity needed for our collective home, the Earth. Led by the totally corrupt and virtually unknown Bank for International Settlements, this private banking cartel creates money completely out of thin air as DEBT, thus placing countries, communities and families with a debt noose around their necks. It is insanity and I just don’t understand how you cannot see this. Why do you persist in supporting what is effectively a privately run pyramid scheme that seeks more and more control over all of us – it is simply a criminal institution!
So, with a huge amount of money now needed to right the ship of state and to avoid an extremely damaging recession, the solution is clearly debt-free and interest-free money that is based solely on the wealth, credit and creativity of the nation thus cutting out altogether the criminals that make up the central banking system. As this simple solution is not known by the British people, a national conversation must now begin – will you Richard now help me and others to start this public debate even though you don’t agree with it. Surely the people have an absolute right to hear this proposal – can we both agree on that?
I’m sorry – but you’re just talking nonsense – there was not a single bit of asset backing to the Bradbury pound. That was its whole point. It was a promise to pay based on future tax revenues. That is what fiat currency is.
Please don’t call again.
I am calling for direct monetary funding (DMF) of government spending by central banks – which is what we need. And if you don’t understand it that’s your problem and not mine
Actually you are both advocating that same thing here,that is, publically issued money be created for the gov to spend. Historically governments used notes like the Bradbury pound and the Greenback in a crisis, today we would use electronically created money,the principle is the same.
We just need to do it correctly now and forget about governments’ balancing budgets and borrowing.
In an ironic way this is a perfect time for us to do this since all the other nations are suffering similar fates. We do not have to worry so much about going it alone on this any more,we probably would never get a better chance of switching to an MMT world than now.
I am aware that there is no difference
I am afraid the Bradbury proponents don’t seem to understand that
It has been frequently observed in recent weeks that government underfunding and minimal staffing of the NHS has created problems in dealing with the current (not unexpected) health crisis. An NHS which struggles annually, every year, to cope with increased winter demand is under-resourced. The same would seem to be the case across much of the public estate judging by the abject failure reported here to meet the economic crisis that is about to destroy much of our SME industrial and commercial base. Between them DWP and HRMC are the agencies we need to be responding here and neither of them appears to be up to the job…. ?
Private sector banking and finance cannot be expected to deal with the current cash-flow difficulties without government assurances that they will be backed to the hilt by government. They are after all in the same boat looking at their own cash flow disappearing down the same hole as their clients and customers, and finance epitomises the selfish and risk-averse element of business in spades, compounded by stripping-out the entire layer of management which actually understood small scale business.
Still….all things considered, it could be worse…..at least we haven’t got Donald Trump leading the response ….
As our erstwhile PM was quoted as saying “f##k business” it can hardly be a surprise when he does.
Richard – you wrote:
“I am aware that there is no difference
I am afraid the Bradbury proponents don’t seem to understand that”
So why the negative hostility towards me? Let’s team up and start a national conversation on Sovereign National Credit before it all becomes too late. Businesses are going bust – our whole economy will go into a deep recession. Petty in-fighting is not the answer. We must educate people about real money creation.
Stop telling me I am wrong then
I will not stop telling you that you are wrong though, because you are: Bradbury’s were fiat currency
And I have been discussing this issue for years, if you have not noticed
[…] It assumes that there the coronavirus crisis must be paid for, when all that is missing is credit at present, as I have explained. […]