T e current drip-feeds and cliff -edge approach
to business support measures is also too short term and leaves businesses unable to plan. T is inevitably damages confidence and forces companies to make short-term decisions out of necessity. T e Job Retention Scheme clearly demonstrates this, and lessons must be learnt from the original furlough scheme end date in October, where the delay in extending the scheme helped drive redundancies to a record high of 370,000 in the three months to October 2020. T roughout the pandemic, directors of limited
companies have fallen into the gap between the Coronavirus Job Retention Scheme and the Self- employment Income Support Scheme (SEISS) because they take only a minimal salary and, instead, rely on company dividends for their income. Although there are technical challenges with this, the Budget would be an opportune moment to expand this support to cover company dividends as well as the PAYE salary. How are we going to pay for this? T roughout 2020, questions were raised as to how the Treasury would pay for the record borrowing levels to fund the support measures. There is speculation the Chancellor is considering a substantial increase in Corporation Tax, raising fuel duty and making changes to National Insurance contributions and Capital Gains Tax, although so far nothing offi cial has materialised. While the fi scal challenges facing the UK are signifi cant, the temptation to start fi scal tightening
too early must be resisted to avoid prolonging the economic damage from COVID-19. If the recovery is stifl ed by tax rises or by a signifi cant reduction in public spending it could have the perverse eff ect of making the Treasury’s fi nancial position worse. A smaller economy will generate less revenue for the Exchequer. Cutting off growth risks higher unemployment, less spending in
the private sector and lower profi ts for businesses, which all mean there is less activity to tax. Instead with ultra-low borrowing costs, the focus must be on boosting economic activity to sustainably grow and broaden the UK’s tax base. Billions have already been spent helping good businesses to survive
this unprecedented crisis and to save jobs. Let’s hope this Budget delivers, and ensures businesses are not allowed to fail now.
If you are interested in fi nding more about Bedfordshire Chamber of Commerce, get in touch on 01582 522448 or at
www.chamber-business.com
ALL THINGS BUSINESS
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