Chancellor of the Exchequer update speech
key update from John Bridge OBE DL

Yesterday Rishi Sunak, Chancellor of the Exchequer, provided in Parliament an update on the economy and comprehensive economic plan and you can read his speech here

Regretfully there were no new initiatives despite conveying strongly to the Chancellor that businesses cannot afford to wait until his budget in March and asking the Government to set out a clear plan for 2021 and to introduce the following long-term measures to support business cashflow:

  • Extend and expand business rates relief – First, the 100% business rates discount for businesses in the retail, hospitality and leisure sectors in England for 2020-21 should be extended to all businesses whose ability to generate revenues are severely impaired, whether they are mandated to be closed or not. Revenue tests could be used to ensure these are appropriately targeted. Second, the relief must be extended beyond March for the duration of 2021/22 financial year.

  • Increase small business rate relief threshold – to ensure that all small businesses have access to the grant support and relief on business rates no matter where they are located.

  • Offer immediate and more significant cash grant support – the LRGS grant scheme is wholly inadequate for the level of fixed costs many wholly viable businesses face. We have been shown many examples of businesses who are receiving £3,000 per month which does not meet their contractual costs, which they will very soon not be able to meet. Offering immediate, upfront cash grant support – at least equivalent to levels available in the first national lockdown - with sufficient funds to provide for all businesses that need it, would help to ease the cash crisis that many businesses are facing.

  • Extend deferral on VAT – nearly half a million businesses together deferred around £30 billion of VAT up to the Chancellor’s September statement. This has, undoubtedly, been extremely helpful, as has the creation of an interest free repayment plan. But more stability and certainty, and more support, is required. Most importantly the VAT deferral must be extended to at least the end of 2021. Further, the Chancellor should look very carefully at whether the repayment plan can also be extended even further.

  • Improve access to government lending schemes - While the extension to the government backed loan schemes is a welcome step, most firms who bank with non-accredited lenders remain effectively locked out of these vital financial lifelines. Government must work with regulators and banks on solutions to ensure that all eligible firms can access this support to help them weather this challenging period. It should also include extending the capital repayment holiday on existing loans as well as extending the loan term by the amount of the repayment holiday.

  • Confirming that the Job Retention Bonus previously announced by the Chancellor will be paid as well as setting a firm date for the payment to be made.

  • Support for the businesses and individuals excluded from help – Even at this late stage to remedy a huge hole in the support offered, to owner-directors of limited companies, freelancers and others who have fallen through the cracks.
Although there are many desperate for additional as well as first time support now it is clear that currently no changes are planned to the existing announced economic support, which can be accessed here,  until the budget on 3rd March. 

We w ill as always continue to strongly convey the necessity for a clear longer term plan for 2021 and the extra support necessary in these unprecedented times for our local businesses as well as to protect our economy for the future.

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