Firms running short of cash and resilience cannot afford to wait six weeks for the budget to secure more financial help from the government.
The warning came from CBI director general Tony Danker as he called on the chancellor to extend the furlough scheme, defer VAT payments and resist the temptation to raise business taxes as a way of plugging the UK’s record peacetime budget deficit.
In its budget submission to Rishi Sunak, the business organisation called for an immediate £7.6 billion injection from the Treasury as part of a £17.9 billion package designed to see the economy through lockdown, stimulate investment over the coming year and prepare the UK for the challenges of the coming decade.
“The budget comes at a crucial time for the UK. The government’s support from the very start of this crisis has protected many jobs and livelihoods, and progress on the vaccine rollout brings real cause for optimism,” Danker said.
“But almost a year of disrupted demand and extensive restrictions to company operations is taking its toll. Staff morale has taken a hit. And business resilience has hit a sobering new low.”
The newly appointed head of the CBI told The Guardian he thought there was a strong chance that the chancellor would respond to the call for:
- A £6 billion extension of the furlough scheme – which subsidises the wages of temporarily laid-off workers – beyond its planned end in April to the end of June and further targeted support to protect jobs subsequently.
- Lengthening repayment periods for existing VAT deferrals until June 2021 at the earliest and allow firms to defer VAT bills for the first quarter of 2021 for 12 months.
- An extension of the business rates holiday for at least another three months to those UK firms forced to close under current restrictions and expanding relief to their supply chains.
Danker said he thought Sunak would listen to the growing clamour from business.
“If you want to have effective policy I don’t think you can wait until 3 March [budget day]. Firms are not going to wait until 3 March before making decisions.”
Danker added: “The government must once again stand shoulder-to-shoulder with businesses to underwrite support for the duration, helping viable enterprises to last the course.
“Many tough decisions for business owners on jobs, or even whether to carry on, will be made in the next few weeks. If the government plans to continue its support then I urge them to take action before the budget which is still more than six weeks away.
“The government has done so much to support UK business through this crisis, we don’t want to let slip all the hard work from 2020 with hope on the horizon.
“The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop, but tail off over time. Just as the lifting of restrictions will be gradual, so must changes to the government’s sterling support to businesses.”