17 April 2020

Government unveils comprehensive COVID-19 support package

The Falkland Islands Government has today announced a suite of new measures to assist businesses, private sector employees and households as they adjust to the economic effects of the Covid-19 Pandemic.

The measures when taken together represent a comprehensive approach to addressing the cash flow needs of private sector workers and households and the liquidity needs of micro, small and medium sized businesses over the next three months.

A sector specific package of measures for wool farmers and other sectors are being considered separately.

The measures proposed are together comprised of:

• a job retention scheme to assist with employee retention and to support income stability for households;
• an enhanced unemployment subsidy system to support income stability for households where individuals have been economically dismissed;
• direct non-repayable grants to businesses to assist with liquidity;
• provision of government backed loan guarantees for businesses to assist with liquidity, subject to approval of the Secretary of State;
• reductions in electricity rates to support businesses and households
• a waiver of utility service charges for a period of ninety days
• existing government mechanisms that can be accessed during times of need

The following summary provides a general overview of the measures but should not be relied upon as definitive guidance, which shall be provided in due course. The application of one or all of these measures may be contingent on the status of the government’s response to the Pandemic. Government will advise of any changes as and when they occur.
1. A new job retention “furlough” scheme

Businesses may find themselves in a position where they are unable to pay their employees’ wages and salaries due to a significant reduction of revenues over a protracted 90 day period. Similarly, self-employed workers may face a serious reduction of their income. Under this measure, if an employer is unable to operate or have limited or no work for the employee because of Covid-19, and if the employer and employee both agree, the employer would be able to keep the employee on the payroll at 80% of salary. This is known as being ‘on furlough’.
• With respect to employees, the new scheme will cover
o 80% of salary for furloughed employees for a period of up to 90 days
o 80% of salary for employees on reduced hours, proportional to the percentage of hours not worked for a period of up to 90 days.
• With respect to self-employed workers:
o the new scheme will cover 80% of the last two years’ average monthly net earnings for a period of up to 90 days .

For both employees and self-employed workers, there will be a cap of £2,500 per
month.

All payments will be considered taxable in the hands of recipients.

The recently announced Private Sector Employee Support Scheme will continue to apply to those who are required by KEMH to isolate or who are on the vulnerable list. However, non-essential workers required to stay at home by the government would now be covered under the new Job Retention Scheme effective April 24, 2020.

2.0 Unemployment Subsidy System

A new unemployment subsidy system will be targeted at workers who are dismissed as a result of the crisis. This measure will provide financial reassurance to those who have been dismissed, through no fault of their own, as a result of the Covid-19 pandemic.
• The unemployment subsidy will cover 60% of the last monthly salary for a period of up to 90 days
• There will be a cap of £2,500 per month.

All payments will be considered taxable in the hands of recipients.
This measure will have an effective eligibility date of March 20, 2020.

3.0 Direct Grants to targeted micro, small and medium enterprises

Some businesses may face high solvency risks due to a significant or critical reduction in demand for their goods or services. The government would provide financial support to temporarily support the economic viability of two broad classifications of firms with two different types of direct, non-repayable grants.
Micro and Small Businesses
The level of each individual grant will:-
• will be targeted to businesses below £500,000 in turnover;
• will be calculated so it avoids being an unnecessary windfall;
• will range from zero to a total of £20 thousand for a 90 day period; and
• All payments will be considered taxable.

Micro, Small and Medium Sized Businesses in the Hospitality Sector and the Human Health and Social Work activities sectors

The level of each individual grant:-
• will be targeted to businesses below £1,000,000 in turnover;
• will be calculated so it avoids being an unnecessary windfall;
• will range from zero to a total cap of £30 thousand in total a 90 day period; and
• All payments will be considered taxable.

The government is targeting May 1 for this programme to be “application ready”.

4.0 Government Guaranteed Loans for businesses

The government intends to further explore the establishment of a Government guaranteed commercial loan scheme that would allow businesses to apply for a partially government guaranteed loan up to a government authorized maximum. Among other considerations, such a scheme would require approval from the Secretary of State.

5.0 Service Charge Waiver

Service Charges will effectively be “waived” for a period of three months.
The reduction in rates to zero will benefit all households and businesses with premises.
The start date for this reduction will be advised in due course but will occur as soon as possible.

6.0 Electricity Credit

The price of electricity will be reduced from 23p to 18p per unit for a 90 day period.
This measure will apply to all businesses and households.
The start date for this reduction will be advised in due course but will occur as soon as possible.

7.0 Other Financial Measures

Following discussion with the government, Standard Chartered Bank is now in the process of designing measures to support those of its borrowers affected by the current challenging circumstances. The Bank will consider up to 3 months payment holidays on all existing lending product lines for those customers that contact the Bank and provide a summary or evidence of hardship. Customers can contact the Bank directly for guidance.

8.0 Other General Measures

In addition to these new measures, Falkland Island residents are reminded that there are other existing avenues that could be pursued if they are experiencing financial hardship as a result of the pandemic.
• Some residents may be eligible to apply for contribution credits to the Falkland Islands Pension Scheme.
• If you are experiencing difficulty paying taxes as a result of the pandemic consider having a discussion with the Falkland Islands Government Taxation Office to explain your situation.
• If you are in FIG housing and experiencing difficulty paying your rent as a result of the pandemic consider having a conversation with the Housing Office to explain your situation.

About the FIDC

FIDC acts as the national economic development agency for the Falkland Islands and is tasked to develop the commercial sector of the Falkland Islands by being one of the principal partners delivering the Economic, Rural and Tourism Development Strategies.

To help drive sustainable economic growth and assist in the creation of new jobs and opportunities, FIDC provides various forms of support and assistance to the Falkland’s business community.