Jhe chancellor revamped its first effort into a loan program for businesses to tide them over at the worst of the lockdown. Gone are the restrictions that forced small businesses to find collateral to secure loans, putting their homes at risk. Large businesses, discouraged by the requirement that they seek commercial loans first, found that the new program allowed them to approach lenders for a 12-month interest-free loan with an 80% government guarantee. Rishi Sunak believes that all businesses should be able to benefit from its renewed range of loan programsbut not everyone is so sure.
Package travel operator
Marc Vincent, chief financial officer of Newmarket Holidays, says the company sells 80,000 holidays a year and around a third are sold online. Now he is overwhelmed with customer requests. This means that he cannot lay off staff: everything is at the pump.
“If tour operators are allowed to go bankrupt, it will be like a run on a bank, with a long chain of suppliers also affected,” he said. “And then the government will have to bail out the customers anyway, so good to do it now.”
With no money coming in and unable to take advantage of the furlough scheme – which allows companies to send workers home while the government covers 80% of their wages up to £25,000, capped at £2,500 a month – the company suffers. Of 148 employees, only 52 were laid off.
To qualify for a VAT holiday until the summer, staff have spent the past week digging into payments, although they say the savings are limited.
Regulations that give customers the right to demand their money back on package holidays within 14 days of cancellation should be changed, he says. Instead, travel companies should be allowed to offer credit notes that can be refunded after two years if not spent. “Other EU countries are doing it and we should be doing the same.”
Princess employs 3,000 people in Plymouth. Last year it posted an operating profit of £30m for 2018 on revenue of £340m. Today, his £600m order book is effectively frozen. The factory where some of the most spectacular yachts in the world are built is closed and 70% of the staff are at home.
Chairman and CEO Antony Sheriff was disappointed with Sunak’s first push for a loan program for midsize companies like his when he insisted they access commercial loans – a costly and cumbersome procedure. The reforms mean the company will now look at them favourably. “I think he did a good job,” the sheriff said.
The 55-year-old business has cash in the bank and could withstand several months of lockdown, he says, but he worries about the costs of restarting in the summer or fall, which could mean spending on materials would be prohibitive. Dear.
“We manufacture everything on our boats, from the hull to the furniture. Everything happens here. We represent around 15,000 jobs in the Plymouth area and the ease of resuming production is key,” he says.
Any thought of profits this year has evaporated. “Everyone will look back on 2020 and say what a shame, but hopefully few people will focus on finances in a year that is pretty much a waste,” he says.
There are officials within the Treasury who see universities as the backbone and economic engine of many towns and cities in Britain. Huge employers, they are also linked to the local economy through relationships with businesses and state agencies, including the NHS.
Richard Dale, chief financial officer of Newcastle University, said he had suspended construction work to save money and switched to working and distance learning to keep students on the right way. But he expects a big drop in the £90million a year the university receives from overseas students. They make up 17% of the current university population, excluding EU students, who will be considered foreign from next year if a Brexit deal is reached.
Some staff on fixed-term contracts have had their status suspended, he says, as the university seeks to place them in other roles. But his main concern is closing the likely two-to-three-year gap before the number of foreign students returns to current levels. “We don’t have the resources to continue the research with the financial help of our funders. We don’t get the full economic cost of research paid for other than through cross-subsidization of income from international students. It has always been an unstable situation that the pandemic forces us to deal with,” he says.
“I have spoken to our leadership team about government funding and how the travel industry has reacted passively as airlines like Virgin Atlantic have said a subsidy is desperately needed,” said Peter Deer, general manager of Fred Olsen Cruise Lines.
Virgin has called on the government to give the industry up to £7.5billion in state support. The Chancellor rejected the appeal, saying he would only consider support on a case-by-case basis. Despite this setback, Deer thinks the travel industry should make more noise.
The company, which has a turnover of £200-250million, has four ships waiting in the Firth of Forth and a fifth, the Braemar, about to join them from Southampton. Around 300 of the company’s 500 staff in Ipswich are working from home as they deal with customer enquiries, many of which relate to lost bookings. The others are at home and not working.
“We use the furlough scheme, and that’s great, but we have to deal with a lot of other costs,” he says, adding that the government should do more to prevent the sector from contracting.
“The drop in cruise business has been a huge shock to our suppliers, the majority of whom are in the UK. There are 40,000 people in the industry and they are completely ignored.