£30m support for South Yorkshire businesses in Tier Three 'a drop in the ocean'

£30m for South Yorkshire businesses in Tier Three has been described as a ‘drop in the ocean’

By Business Editor David Walsh
Wednesday, 21st October 2020, 5:02 pm

Politicians negotiated the sum on top of the Treasury’s baseline of support ahead of the region being placed in the severest restrictions indefinitely on Saturday morning.

Up to 939 pubs and 14 wine bars will close unless they can operate as restaurants offering ‘substantial meals’. Some 142 betting shops, bingo halls and three casinos will also be forced to shut.

A spokeswoman for the Sheffield City Region organisation said it was too early to say how the money would be spent and whether and how businesses could apply for it.

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A coronavirus advice sign in Sheffield city centre, as South Yorkshire is the latest region to be placed into Tier 3 coronavirus restrictions, which will come into effect on Saturday. PA Photo. Picture date: Wednesday October 21, 2020. See PA story HEALTH Coronavirus. Photo credit should read: Danny Lawson/PA Wire

Mazher Iqbal, cabinet member for business at Sheffield City Council, said they would have to keep lobbying for more money because £30m “was just not enough.”

Drew Woodhouse, senior lecturer in economics at Sheffield Hallam University, said the cost of Tier Three to the economy was about £1.5m-a-day, meaning the £30m would last about 20 days depending on how it was spent.

He added: “In the context of the economy, £30m is small, it’s a short term injection designed to get the R rate below one.

“It’s a sticking plaster covering a gaping hole that will grow should this situation continue and the measures don’t work. Politicians should be looking at pushing for more, a series of grants may be needed.”

Coun Mazher Iqbal.

Alexis Krachai, director of Sheffield Chamber, said the £30m was welcome but it was a “drop in the ocean.”

“Nothing can fully compensate businesses that are forced to close. That said, this support is welcome and should be used to support viable businesses to ensure we come out of this as strongly as possible. The business community and politicians need to develop a simple, transparent mechanism to ensure it gets to the firms that really need it.

“If we were managing the virus effectively we wouldn’t be doing this.”

Track and trace had to be ‘fixed’ and there should be payments for people who had to isolate but could not work from home, so they did not have to choose between safety and food.

Drew Woodhouse, senior lecturer in economics at Sheffield Hallam University.

He said Tier Three offered ‘some certainty’ for businesses compared to Tier Two which was the ‘worst of all worlds’ - but an exit strategy was needed.

“Businesses want a long-term plan to get the economy opened back up. Until we fix these basic issues we will keep spending taxpayers money on short term deals.

“We need to be honest. No amount of financial support can fully compensate businesses when you need to close down parts of an economy as these restrictions do. The government needs to come up with an exit strategy. Jobs will be lost and businesses will fail unnecessarily if they do not.”

The new rules will be reviewed after 28 days initially and then every fortnight.

Sheffield city centre will move into a 'very high' alert lockdown from Saturday.

Baseline Treasury support for businesses forced to close includes:

Business premises with a rateable value of £15,000 or under will receive grants of £1,334 per month whilst those with a rateable value of more than £15,000 and less than £51,000 will receive grants of £2,000 per month.

Larger premises, with a rateable value of £51,000 or more, will receive grants of £3,000 per month.

The Government will also pay two thirds of employees’ salary, up to a maximum of £2,100 a month.

Soft play centre The Play Arena on Little London Road must close.

Founder Sipra Deb said the baseline support would give her £3,000-a-month and pay two thirds of staff wages.

Alexis Krachai, director of Sheffield Chamber.

But the business has bills of more than £10,000-a-month. Workers were on minimum wage and a reduction would be financially crippling.

Without ‘enhanced support’ the business, which employs 22, would be forced to close permanently, she said. And she was angry at the logic of some similar firms being allowed to operate - such as trampoline parks - and that schools were still open.

She said: “We have the same ‘clientele’ - children. I’m being put out of business for no logical reason. Surely if soft play centres have to close schools should close because cases are on the increase.

“I spoke to Environmental Health and was told we’re being move to Tier Three because we need to reduce the number of Covid cases by 50 per cent. It’s unlikely the new restrictions will do that in 28 days. The reality is more like three months or more likely four or five.

“We have only been open seven weeks. We were closed longer than everyone else and had just opened. There is no way I can pay the bills and a third of staff wages with no money coming in. I can’t see us being able to come out of this without more support.”

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Sipra Deb of Play Arena.
Robert Hayton, head of property tax at Altus Group.