“All the evidence shows that the Chancellor’s actions are not helping prop up the UK economy – Government support for business is not working” – that is the conclusion of Frank McKenna, the Chief Executive of business lobby group Downtown in Business.
He stated: “Unemployment is dramatically increasing and will rise even further as soon as furlough payments cease. As Begbies Traynor, the insolvency experts, have shown, there is a major increase in companies that are significantly distressed. With people forced to work from home and schools now closed productivity is going to be on the floor. All indicators are that Rishi Sunak’s interventions are not enough to keep the economy on track.”
Frank continued: “Today’s announcement does not go far enough. Whilst he has announced some money for those forced to close completely, there is little for all other businesses. The self-employed and directors are still not receiving adequate support. For larger firms, furlough only pays 80% of wages, so the other 20% has to be found, one still has National Insurance and Pension contributions to find, there is rent to pay and the Coronavirus Business Interruption Loan (CBIL) repayments are coming down the line. This is why we’re seeing mass redundancies and companies in significant distress.”
Offering solutions, Frank said: “Rishi Sunak must now announce a National Insurance and Pension contribution holiday for those sectors hardest hit. He also needs to instruct banks to introduce an ‘interest moratorium’ and he should initiate discussions with commercial landlords to explore the possibility of extending leases and adding any outstanding rent to repayments across the duration of the lease – again with the support of the banks where necessary. These unparalleled times call for unprecedented action from the Treasury.”
Mr. McKenna added: “I’d also expect the furlough scheme to be extended through to July now. Given that all the indications suggest a further three-months of lockdown or near-lockdown, a Spring re-opening, assuming the vaccine is rolled out efficiently, will mean that businesses require a further quarter to get their cash flow going and can steady the ship.
A failure of the Chancellor to act with another bold range of initiatives would see many good businesses fail. For what would be a relatively small sum of cash from the public purse, Rishi Sunak can avoid the worst effects of the latest pandemic impact.”
Mr. McKenna finally stated: “Businesses need some comfort and reassurance as we head into 2021, a further announcement from the Chancellor needs to come in the next day or two.”