What’s it going to take to get our local economy going again?

Claire Christian

Claire Christian is a successful businesswoman on the Isle of Man, contributing to the retail offering of high-end affordable fashion, and bespoke womenswear. A long-term veteran of the retail, wholesale, manufacturing and luxury end of the fashion industry such as Burberry, Hardy Amies and Melissa Odabash, Claire returned to the Island seven years ago to establish her brand and independent business. During the Covid 19 Pandemic she has been a crucial conduit for the self-employed, businesses and local government, and has been instrumental shaping the government’s support policies.  

What’s it going to take to get our local economy going again?

As the government releases sectors in a phased approach to get our economy back on track, it may look like things are improving, but the truth of the matter is very different. Back in March when we were all asked to close, the government said help was coming in the way of government and non-government support.  A three-month plan was established, the Emergency Powers Act was brought into place, and we were told this was just the first phase.  

We can look back on the support now. Some businesses and later the self- employed (of certain sectors) were able to get the £3,000 Business Support Grant, but this wasn’t always easy, and there were often stumbling blocks for many along the way. For some the £3,000 was nowhere near enough for a planned three-month mothballing.  Many deferred rents or mortgages, utility bills, paying Tax, NI, VAT, invoices, and many more costs.  And the fact of the matter is that these bills have now added up, and need to be paid.  

Some will have used the grant to pay some bills along the way, and some will have used it as a wage (especially in the case of self-employed, who couldn’t claim MERA at the same time).  Businesses were also given further support in the way of the Salary Support Scheme – a scheme which allowed businesses to claim up to £280 per week towards their salary costs if they saw a 25% reduction in revenue. Different to the UK, the salary support scheme allowed businesses to let their employees continue working (if they could) at the same time, whereas in the UK, they were forced not to work at all.  Again, another scheme of three months duration.

In the beginning, nobody could have predicted how and if the community would manage to flatten the curve, but we did and as a result industries started to return back to work before the three months were up.  Construction and other associated industries the first to return, on 24thApril, then Non-essential retail, on 18thMay.  

So has the construction industry returned to full capacity?  The answer is not simple, and there are many factors to consider. There is a backlog of planning approvals, and when the planning office re-opens, a bottleneck of applications is predicted, which may take a lengthy time to clear. I know that the building next door to mine is still under construction. Their steal workers were from Ireland, and had to leave the Island before lockdown, the job was only three quarters done, and as yet they aren’t able to return.  

They also need specialists for the front of the building, skills that are not available on the island. This is going to cause delays.  Smaller building firms are struggling because people just don’t have the disposable income they had before.  There is definitely less work, jobs are being cancelled, and it is not looking good for some future planned projects in this current climate. 

I have previously spoken about non-essential retail also having problems. Yes, we are back open, but people are still nervous to shop; they have nothing to shop for, no events, no weddings, no nights out, can’t go to restaurants etc. Yes, our wonderful customers are loyal and are supporting us, but ultimately we are still delivering items locally, and our store footfall is dramatically down.

More industries are planning to return soon, but social distancing means they can’t do the same amount of appointments in one day, some businesses have to stage their staff being in at work, social distancing means everything take a lot more time.  

For bars and restaurants, they can only open if they have an outside space, which many do not, and furthermore – let’s face it – we are not in Ibiza, with the guaranteed weather.  We have been lucky with the weather so far… but dare I say how long will it last? You can bet the minute we can go to Foraging Vinters again it will rain!

Ultimately the truth of the matter is, ALL INDUSTRIES will not be the same. For two major reasons; social distancing, and our borders being closed.

It is fair to say we are going to be looking at  another three months of struggling, at least, and therefore further Government Support is needed. What I don’t understand is how the government thinks we are in a better situation than we were three months ago?  Yes, they may not be as bad, but there are many industries which need more support.  It was announced that the Salary Support and MERA would continue.  But there is huge disparity between these support packages. A business that has re-opened will have time over the next three months to maybe gain some economic momentum, and while they do so, they can still keep claiming the Salary Support of up to £280 per week to contribute towards each member of staff’s salary. 

Government hopes businesses will make enough revenue to start paying bills etc again, but this is by no means certain – because, actually just by the fact that the business is still claiming Salary Support – doesn’t this mean they are still struggling?  Obviously businesses that are not open can claim the same, but remember they are not making any other revenue to pay their rents, bills etc. A major factor is the cancellation of the TT; the whole Island economy is supported by this event, and this revenue is simply not arriving in June – some businesses rely on this fortnight to sustain a profit over the year. 

There is NO sign of another grant. These businesses and individuals are only protected for another 25 days under the emergency powers with regards to protection from evictions regulations 2020. Will this be extended?  Businesses and individuals need to know.  

And now let’s talk about MERA – the elephant in the room. Self-employed people can apply for MERA or continue claiming MERA (if they didn’t get the grant) from the 1stJune. If you are switching from the grant to MERA you need to meet all the necessary requirements (which in theory you should, as you were given a grant), meanwhile those that are continuing to claim MERA cannot claim it if they earn more than £50 per week – the biggest caveat of this government scheme.  

There is a huge disparity between what the businesses can claim to help towards the costs of paying salaries, and what a self-employed person can claim – which is basically nothing, as they are bound to earn more than £50. What is the problem with this?  Self-employed people still have costs  – rents, bills, costs associated with running their business, not to mention PPE, just as a business does.  So while a business can earn up to 75% of what they used to, and use this to contribute towards their running costs, the self-employed cannot do the same. 

There is no doubt about it, the government schemes have helped businesses and individuals, but more help is needed. Maybe not for all, but sectors which aren’t able to open – the ones that rely on our borders being open, and those that would require no social distancing to be successful – need to know now what support is coming. These include hotels, B&B’s, car hire companies, airport parking facilities, bars, nightclubs, venues.  And then there are the rest of us who have opened, who are nearly open, or who are opening in a couple of weeks. Our businesses aren’t performing at their optimum, and cannot do so. It is not business as usual.  And while we have those two major factors prohibiting our economy from flourishing – we need more support.

This is my last blog post for Business 365, it has been an absolute pleasure to have been given a platform to tell our local small to medium business story during the pandemic.  Don’t worry, I wont stop telling our story, and I’m still available on the Local Companies Isle of Man Facebook group.  

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