said that support would be given to "viable companies which have exhausted all options", whose failure would "disproportionately harm the economy". It aims to step in to support sectors of the economy most affected by the pandemic and to reduce job losses, but will only assist companies as a "last resort". Whilst the scheme was more likely to involve loans, it was also discussed as including stakes being bought in companies, though the Chancellor of the Exchequer, Rishi Sunak, was understood to be reticent about this. He said instead that companies would be required to make formal pledges related to executive compensation, employment, greenhouse gases and tax.
History
There were financial schemes and packages announced by the government to support companies, such as the Coronavirus Job Retention Scheme and the Bounce Back Loan Scheme, but concerns were raised that large businesses would remain in difficulty after using options already in place.
Companies ask for support
Car manufacturers including Aston Martin and Jaguar Land Rover have looked into government funding, with the latter in talks for a potential £1 billion loan. Taxpayers may hold stakes in the company as a potential result of the discussions. The airline Virgin Atlantic asked for the government to provide it with a £500 million emergency loan, saying it was planning to cut 3,000 jobs, and the Scottish-based regional airlineLoganair also asked for help. Tata Steel's UK business asked for £500 million in government support.
Companies receive support
The first company to receive a loan through the scheme was Celsa Steel UK, which was provided with a £30 million bailout. The company, which is the UK's largest steel rebar manufacturer, was given a series of legally-binding conditions to adhere to, and told that the money was to be repaid in full.
Response
The Shadow Chancellor of the Exchequer, Anneliese Dodds, said that the support should focus on maintaining employment, and that companies receiving support should be "prevented from engaging in share buybacks and dividend payments". The importance of support for key businesses was commented on by the Institute of Directors' chief economist who warned of the knock-on effect that key business failures could have on the supply chain. Unite the Union welcomed the news of the scheme and said that it could prevent "a tsunami of job losses" from affecting communities.
