Budget plea: Don’t bottle it Mr Chancellor ... you must be brave
- Credit: PA/Getty Images
Now is not the time to get cold feet over spending plans, Mr Sunak – but the Budget needs to be targeted and long-lasting, writes Eleanor Pringle.
Boris Johnson may have promised light at the end of the tunnel but without financial support for businesses the British public will be blinking out on to barren wasteland instead of a high street.
Luckily for the economy, Rishi Sunak has a Budget booked in on March 3 and he will need to delve once more into his very deep pockets if he wants to maintain the buoyancy his financial aid has thus far maintained.
And policy makers, business owners and industry experts are all saying the same thing: “Now is not the time to withdraw the ‘arms of government’ from around the economy in favour of balancing the books.”
Crucially, the government has seen its borrowing level spike coincide with a relatively low debt interest rate, meaning it is accumulating lower additional charges in the long term.
Andrew Mower is the East of England’s regional development manager for the Federation of Small Businesses.
He said the immediate priority is to plug the gaps that still remain in existing support: “More than one in five business owners have received no financial help from the government since the start of the pandemic and only around half have accessed a grant.
“It’s time that more support was extended to firms without commercial premises or those who don’t neatly fit into the definitions of the retail, hospitality and leisure industries.”
A policy which would potentially have the biggest impact for healing the wounds of the high street would be continuing the business rates holiday.
He added: “More small firms should be brought within the scope of rates relief as part of the current review, and so we’d like to see the chancellor increase the threshold from £12k to £25k.
“In the meantime, and given the devastating impact that Covid-19 has had on many high street firms, it is vital that 100pc rate reliefs continue to apply for another year.”
Keeping with the theme of bricks and mortar, an extension of the stamp duty land tax break was also highly requested by the housing industry.
Peter Ogilvie, from the residential team at the Ipswich branch of Savills, said: “Unsurprisingly we’ve seen a real sense of urgency from buyers who want to complete their transaction ahead of the stamp duty holiday deadline of March 31.
“With the current lockdown causing further economic disruption and making it more difficult for some buyers to complete, there’s arguably a stronger case for extending or tapering its withdrawal. I think that would certainly help keep activity at a good level.”
But a wealth tax or income tax rise should be suspended into the longer term, according to Kerry Williams, associate director of Norfolk-based chartered accountants Stephenson Smart.
She added: “We’re not expecting an increase to income tax due to the triple tax lock manifesto commitment which saw the government promise no increases to income tax, national insurance or VAT.
“However, I would expect an income tax rise more longer term.
“The chancellor may instead choose to freeze the personal allowance, currently £12,500 and normally rises with inflation, which will generate additional revenue.”
However, VAT cuts should not be offered to hospitality and leisure businesses alone, said Daya Thayan, chief executive of Kingsley Healthcare, which operates care homes across Norfolk and Suffolk.
He believes VAT exemptions should continue on PPE prices: “Industry costs have risen substantially and we are not passing this cost on to anyone else. Any support to plug some of those expenses can only help us.”
Like many others, he also believes a furlough extension is key: “It’s important to keep furlough going while businesses are still adversely affected by the pandemic and lockdown.
“In our case it has enabled us to furlough staff who have been necessarily shielding or those who could not work because of childcare issues during the lockdown.
“It also means we have been able to retain trained and loyal members of staff and they have been able to keep their income and the dignity of employment.”
Andy Wood, chief executive at Southwold-based brewery Adnams, echoed: “The prime minister said ‘we are going to do what it takes’ to protect businesses and to protect jobs for those bits of the economy that have to remain closed.
“I am hoping that’s code for an extension to flexi-furlough, an extension of business rates relief and, for the hospitality industry, an extension of the VAT cut to 5pc.
“Those are the things that I wrote to the chancellor asking for last month.”
But Mr Sunak and businesses agree that furlough cannot last forever.
Which is why training and upskilling provisions for long-term and highly-skilled roles are so important on a national and regional level. Harry Harris, group chief commercial officer for East Anglian-based training providers Swarm Apprenticeships, agrees.
“We weren’t involved in the Kickstarter scheme but from chatting to training providers I think it may not have been as successful as it would have been if it was more directly connected with the apprenticeship scheme,” he said. “If we could see a wage subsidy alongside a longer-term training opportunity like an apprenticeship it would be a game changer.
“Apprenticeship take up across Norfolk and Suffolk – and indeed nationally – has been extremely busy for us recently.
“We’ve seen a lot of smaller and independent businesses getting in touch who normally wouldn’t because they’re looking to diversify their workforce after lockdown.
“What is so important is that these are highly skilled and long-term roles which will add not only experience for the individual but value for the employer.”
He added: “The green energy and agenda is fantastic and offers some wonderful opportunities here in East Anglia – but we’d also like to see that rolled out to supply chain businesses which are based across the region.”
But as well as policies to immediately rejuvenate the economy, the East of England needs long-term investment to level up, with Mr Mower adding: “The government needs to keep our rural areas front and centre.
“We’ve seen a lot of improvements on digital connectivity but given the way the world of work has changed during Covid-19 more are needed.
“In particular we would like to see some real progress towards a Shared Rural Network as mobile connections in many of our towns and villages in places like North Norfolk remain very unreliable.”
The New Anglia LEP agreed, adding that as well as investment shared more evenly between the East and the North and Midlands, it would like to see towns deals confirmed for Ipswich, Lowestoft, Great Yarmouth and King’s Lynn.