It might have been the Summer Statement but there wasn’t much sunshine for beleaguered businesses in the chancellor’s announcement on Wednesday.

He tried to pretend otherwise by introducing a Job Retention Bonus scheme. He said:

The government will introduce a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021. Employees must earn above the Lower Earnings Limit (£520 per month) on average between the end of the Coronavirus Job Retention Scheme and the end of January 2021. Payments will be made from February 2021. Further detail about the scheme will be announced by the end of July.

One third (supposedly) of the package announced by the chancellor will go on this - but that assumes every single furloughed employee will keep their job. But we know they already haven’t. So, this scheme will not cost the budgeted £9 billion.

Will it encourage any business to keep a job open from October to January when they might not have otherwise done so? No, it won't.

Because the bonus is £1,000. And most people will go back to something like average paid jobs - with wages on average of £24,000 pa the total cost for three months (including pension and NIC) will be about £7,500. Will £1,000 encourage you to pay out £7,500 you could not otherwise afford to do? No, of course it won’t.

So, this scheme will reward those who would have taken their staff back on anyway. It will not encourage the retention of a single job that might have been lost, because there is no incentive to do so, and it provides no help for the self-employed (again).

What message is this sending to your business?

The gravy train has run out of steam. Although I’ve been critical of the government’s support for the self-employed, the majority of small businesses are feeling better off, despite declining sales, than they have for some time. The combination of Small Business Rate Relief grants, furlough grants, CBILS and Bounce Back Loans have meant that many businesses are cash-rich right now.

This was never going to last forever and in his statement the chancellor signalled – albeit while trying to suggest otherwise - that enough is enough, although ‘we’ll wean the patient off support gradually by letting him have £10 off a meal out in August’. Thank you m’lud!

He still believes the aim is to get the national debt (although there is no such thing) down as a proportion of our national income by the end of this Parliament and that can only mean one thing – more austerity.

What action should you take?

Be prepared. Unless you are in one of the sectors that has benefited during the pandemic – for some businesses it’s been Christmas every day – it’s about to get a lot worse. Here is what you should do:

1.       Re-run your next 12 months and 3-year budget and cash flow forecast on the               assumption of a 25%, 50% and 75% reduction in sales.

2.       Scale back your overheads to each of these levels.

3.       Ask yourself: can my business survive at these levels? If not, what are my options?

Because there are always options. Some more radical than others. But thriving in the new economy is one of them. If you are prepared to think differently.

Your competitors may be doing this already. They may have joined one of the ‘Screw Surviving – Let’s Get Thriving’ programmes. A lot of businesses will be more receptive to the idea of changing suppliers than they were before the lock-in and whoever can market themselves the best will capture those customers. Are you already thinking about how you’ll reach out to their customers if one of your competitors closes?

The window of opportunity is short. Unless it changes its strategy – which it won’t - the government is going to be a hindrance not a help. It’s up to you.

Noel Guilford

PS If you want help putting together your Get Thriving Plan and Marketing Strategy lets have a call.