COVID-19 | February 2021

Background

The Policy and Technical team continues to speak with treasurers to understand what issues they are facing and in what areas the ACT can help. We are also talking with the main banks to understand how they are responding to the COVID-19 crisis. At the same time, we have held a number of conversations with HM Treasury, the Bank of England, the CBI, the City of London Corporation and UK Finance. Through these forums we have been able to ensure that the views of the treasury community are heard by policymakers through a number of different channels.

A list of useful material from the ACT, the Regulators, the Government and Others can be accessed from the ACT Knowledge Hub - https://www.treasurers.org/hub/technical/covid19

HM Treasury update

The deadline for applying to the CLBILS, CBILS and Bounce Back schemes has been extended to 31 March 2021 from 31 January. As noted previously, firms that have already applied for Bounce Back loans will be able to top up their existing loans, though this can only be done once.

More support will be available beyond March, through a successor loan scheme. Details of the scheme will be announced in due course, with the government providing a further update on wider COVID-19 economic support at the Budget on 3 March 2021.

The CJRS furlough scheme has been extended until the end of April 2021 with the government continuing to contribute 80% towards wages.

The CCFF scheme

Taken from the Bank of England report, the following table provides some interesting insights (https://www.bankofengland.co.uk/markets/bank-of-england-market-operations-guide/results-and-usage-data).

      

As the graphs above show:

• Only 14% of the nominal amount available has been drawn down – the lowest ever level
• The average value of the amount drawn continues to fall and is now £241m
• Only 22% of approved applicants have drawn down on their CCFF facility

 

This confirms our conversations with treasurers that many are using their CCFF facility as a back-up programme and also many have been repaying debts ahead of key reporting periods.

Details of current borrowers under the facility can be found at https://www.bankofengland.co.uk/-/media/boe/files/markets/covid-corporate-financing-facility/cp-held-by-ccff-by-business.xlsx.

More information on the programme can be found under https://www.bankofengland.co.uk/markets/covid-corporate-financing-facility. 

If you have questions you’d like raised with the Bank of England, please email technical@treasurers.org

We continue to hear from firms that have been able to access the CCFF programme; we provide anonymised feedback to the Bank of England. If you’d like to share your experiences, please drop an email to technical@treasurers.org.

Other Schemes

Bounce back loans charge a flat 2.5% interest rates, while CBILS can charge anything up to 14.9%. The average rate for all CBILS loans is 5.1%.

The Bank has also made available details of the other schemes being made available (https://www.gov.uk/government/collections/hm-treasury-coronavirus-covid-19-business-loan-scheme-statistics#Coronavirus-Business-Interruption-Loan-Scheme ).

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The data shows that:

1. The average value of a CLBILS facility has remained relatively unchanged at £7.3m
2. The average value of a CBILS facility has remained relatively unchanged at £0.238m. There have been 195 times as many applications for CBILS compared with CLBILS with the amount lent under the CBILS scheme being just over 4 times the amount lent under CLBILS.
3. The total value of CBILS loans has increased by 6% since end-December.
4. The total value of loans under the Bounce Back scheme has increased by 3.5% since end-December to £44.7bn and the average value of a Bounce Back Loan has increased slightly to £30,415. This reflects the announcement in November that loans could be topped up to the maximum allowed of £50,000

The British Business Bank last released details of the take up of the schemes it administers split by in October:

• Facility
• Region
• Industry sector

Update from the UK institutions

HMRC has published the names of the 750,000 companies that have applied for furlough support. The list can be found here.

The ONS produces a fortnightly analysis of business responses in a number of key areas. The latest report noted:

Cash reserves:

• Across all industries, 32% of businesses had less than three months' cash reserves, rising to over 50% of businesses in accommodation and food service industries
• 34% of businesses that expressed a view had cash reserves greater than 6 months (down from 42% last time)

Trading activity:

• The percentage of businesses currently trading has remained consistent at 71% in January after falling from 84% of businesses currently trading in mid-December 2020 before the current lockdown restrictions began. This is at the lowest level since early July 2020
• 76% of the other service activities industry (which includes hairdressing and other beauty treatment activities) were temporarily closed or paused trading in mid-January 2021
• 23% of businesses had paused trading and did not intend to restart in the next two weeks, up from 18% in the previous wave

Working conditions:

• The proportion of businesses' workforce on furlough leave has increased slightly to 17% (estimated at 5.5 million), doubling from 8% in Wave 16 (5 to 18 October 2020). This is the highest level since July 2020
• According to the latest Opinions and Lifestyle Survey, the proportion of British adults who worked from home rose slightly to 34%

It should be noted that the survey population tends to be small businesses.

 

Feedback from Treasurers

The slight decrease in the number of active borrowers under the CCFF scheme reflects comments we have heard from treasurers who have reported repaying government loans and, in some cases, repaying furlough related payments they received.

 

Views from across the world

As a member of the International Group of Treasury Associations, and the European Association of Corporate Treasurers and working with our colleagues in the US National Association of Corporate Treasurers we are keeping an eye on developments overseas.

The Brookings Institute has produced a useful summary of the various government support programmes in the United States.

Squire Patton Boggs has produced a useful summary of the various government support programmes across Europe and the Middle East.

 

Engaging with the treasury community

We welcome conversations with our members on:

• How you’re dealing with the crisis
• What you’d like us to raise with the various bodies we are in regular contact with
• How the ACT can support you during this challenging time.

Send an email to technical@treasurers.org and either James Winterton, Naresh Aggarwal or Sarah Boyce will be in touch with you.

If you have found any resources which you feel we should add to our COVID-19 site, please email us with details.

Naresh