Omicron-affected businesses to benefit from more than £700m of government funding

Businesses in England most impacted by the Omicron variant will be able to tap into a multimillion-pound support package in the coming weeks, as the Government today (7 January) delivered funding to councils across the country.

Firms in the hospitality, leisure and accommodation sectors, many of which have seen a decline in footfall and increased cancellations due to the Omicron variant, will be able to apply for one-off grants of up to £6,000 per premises depending on rateable value:

  • Businesses with a rateable value of £51,000 or above: £6,000
  • Businesses with a rateable value between £15,000 and £51,000: £4,000
  • Businesses with a rateable value of £15,000 or below: £2,667

Commenting on the current situation for the services sector, Martin Beck, Chief Economic Advisor to the EY ITEM Club, commented: “The services sector is bearing the economic brunt of the rise of COVID-19 infections, the growing numbers of people isolating and increased consumer hesitancy. This has prompted a significant fall in the services PMI to 53.6 in December from 58.5 in November. This was the lowest since February, although a little above December’s flash reading of 53.2. Consumer-facing services firms, particularly in travel and hospitality, were particularly vocal in citing the adverse effects of the worsening COVID-19 situation.

“The role of sentiment in influencing survey respondents means it’s not straightforward to map the PMI across to activity. And manufacturers appear to be bearing up better – December’s IHS Markit/CIPS manufacturing survey showed output rising at the fastest pace in four months – which meant a fall in December’s composite PMI to 53.6 from 57.6 in November was less marked than the fall in the services PMI. Moreover, news from the latest services survey was not all bad. Firms reported weaker rises in costs and prices, mirroring an easing in supply/demand imbalances in the manufacturing survey.

“But disruption from the current scale of infections risks worsening supply bottlenecks, particularly labour shortages. And combined with a deterioration in high-frequency indicators, the latest PMIs reinforce the likelihood that GDP fell in December.”

In addition to the one-off grants, more than £100 million worth of discretionary funding is also being made available for local authorities to support other businesses.

Business Secretary Kwasi Kwarteng said: “All through the pandemic we have stood by the side of business to ensure they are supported at every stage.

“The spread of the Omicron variant is presenting new challenges, particularly for the hospitality and leisure sectors, so it’s only right that we are stepping up with an urgent £1 billion support package.

“I urge businesses to come forward, engage with their local council and tap into these cash grants, which will help to cover costs and protect jobs as we double down on our efforts to get boosted and defeat this virus.”

The grant funding forms part of a £1 billion support package which includes an additional £30 million for the Culture Recovery Fund and reintroducing the Statutory Sick Pay Rebate Scheme – reimbursing eligible businesses for the cost of Statutory Sick Pay for Covid-related absences.

Rishi Sunak, Chancellor of the Exchequer said: “We know the Omicron variant has hit our hospitality and leisure businesses – which is why, as we have throughout the pandemic, we stepped in to help.

“From today, local councils will be able to distribute this £1 billion package of support to the hundreds of thousands of pubs, restaurants and theatres in need – protecting the millions of people they employ.”

Businesses are encouraged to apply to their council for grant funding which will be administered over the coming weeks.

Businesses eligible for grants are those that offer in-person services, where the main service and activity takes place in a fixed rate-paying premises, in the hospitality, leisure and accommodation sectors. For example, this includes businesses whose main function is providing a venue for the consumption and sale of food and drink, those that provide facilities linked to recreation and entertainment, as well as businesses whose main premise is used for holiday accommodation.

The government has chosen to provide generous grants that are the same size as the monthly cash grants provided to hospitality businesses when they were fully closed earlier this year – despite businesses now being still able to trade.

Other businesses impacted by Omicron, such as those that supply the hospitality and leisure sectors as well as personal care services, are also able to apply for grants with the government allocating more than £100 million to the Additional Restrictions Grant (ARG) fund for local authorities in England.

Local authorities will have discretion to allocate this funding to businesses most in need.

The Business Secretary has written to those local authorities who have more than 5 percent left over from previous ARG funding rounds, instructing them to disburse their remaining funding.