Covid-19 Government Support Measures: A Class Act
Over the last week, the lockdown has started to ease. Parks and public spaces are fuller, non-vital amenities are opening, and more people are on the roads than have been in months. From London to Durham, life and the economy seem to be thawing.
The past seven days have also seen movements in the government’s response to COVID-19. For a flavour of the headlines: the FCA has given further reassurances to consumers, the hotly touted Future Fund has launched, and there has been a tectonic shift in the restructuring and insolvency landscape, with the introduction of the Corporate Insolvency and Governance Bill 2019-21.
The new Corporate Insolvency and Governance Bill, likely to become law before the end of June, contains a mixture of permanent and temporary measures, some of which have been in the works for years and others that are a direct response to the pandemic. The new form of restructuring plan proposed in the Bill, along with the moratorium and protection against suppliers terminating contracts, represent significant additional tools to rescue businesses. Whilst the temporary measures proposed in the Bill will give companies crucial short term breathing space, these measures are designed to minimise the risk of personal liability for directors in continuing to trade, protect companies from aggressive creditor action and minimise regulatory burdens. While not yet enacted, the foreshadowed statute already seems to have had an effect, with the insolvency statistics for April 2020 showing that 1,196 companies collapsed into insolvency in that month, down by 17% year-on-year.
As with previous weeks, this Q&A details the updates in UK government policy response since we published our previous Q&A.
You can check the latest government guidance for businesses, employers and employees here.
You can also access our extensive guidance here, which addresses the evolving range of legal issues that you may need to consider as we all navigate this unprecedented challenge to keep our businesses trading and ourselves healthy.
What Support Measures has the Government Announced?
Restructuring and Insolvency
- On 20 May 2020, the government introduced the Corporate Insolvency and Governance Bill in Parliament, this Bill provides for a number of temporary and permanent measures to support and restructure companies. - Link, and for further information please read our article 'COVID-19: Rising to the challenge - The Corporate Insolvency and Governance Bill', here.
Governance & Regulatory
- On 22 May 2020, the FCA launched a consultation on additional guidance for payments firms to strengthen the way in which they look after customers’ money. - Link
- On Wednesday 20 May 2020, the government’s £500 million Future Fund scheme for innovative and high-growth companies opened for applications. Innovative British businesses can now apply for convertible loans from £125,000 to £5 million to help them through the COVID-19 outbreak. - Link
- The government announced on 20 May 2020 that innovative businesses and start-ups are set to benefit from a £40 million government investment to drive forward new technological advances. Projects to benefit from the funding include virtual reality training platforms for surgeons, virtual farmers’ markets and other innovations borne out of the COVID-19 pandemic. - Link
- On 22 May 2020, the UK’s mortgage payment holiday was extended for another three months to 31 October 2020. Over 1.8 million mortgage holders have already frozen their mortgage payments, which UK Finance estimates to average £755 per month. - Link
- On 24 May 2020, the government announced a £50 million boost to support the recovery of England’s high streets. The Reopening High Streets Safely Fund will help councils in England introduce a range of safety measures in a move to get people back to work and customers back to the shops. - Link
Further key government measures to support businesses and people through the unprecedented challenges arising from COVID-19 have been addressed in our previous updates, which can be accessed here.