The Confederation of British Industry (CBI) has called upon the Chancellor for an emergency £7.6bn injection from the Treasury, because the economy cannot wait until budget day, due to the latest lockdown in the UK.
The CBI which is the UK’s leading employers’ organisation, has warned Rishi Sunak that businesses cannot afford to wait for several weeks until budget day on 3 March, to secure more financial help from the government.
Tony Danker, the director-general of the CBI insists that businesses are running short of cash and resilience and require immediate help to survive the current lockdown, which is due to be reviewed mid-February according to the Prime Minister.
Since the economy clearly cannot wait until budget day, says the CBI, they suggested to Mr Sunak that he 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 the Chancellor, the CBI called for an immediate £7.6bn injection from the Treasury as part of a £17.9bn 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 said he thought there was a strong chance that the Chancellor would respond to the call for:
- A £6bn extension of the furlough scheme for a further two months, beyond the currently planned ending in April 2021 to the end of June, and further targeted support to protect jobs following that period.
- 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.
Danker is responding to the trend that businesses usually set their trading plan at the start of the calendar year, at which time they will be making crucial decisions about jobs, premises and investment. Prime Minister Johnson has assembled the newly formed Build Back Better Council since he plunged the National economy into deeper uncertainty, with his announcement of the nation’s third national lockdown, on 4 January 2021, effective immediately.
Build Back Better Council
Mr Danker said he thought Mr 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.”
He addressed Rishi Sunak and Boris Johnson at the government’s Build Back Better Council, which chaired its first ever meeting, virtually, on Monday 18 January. Johnson’s Build Back Better Council has been launched to ‘unlock investment, boost job creation and level up the whole of the UK.’ Established to work with 30 business leaders, including Danker, to fuel COVID-19 economic recovery and future growth plans, which is part of the effort to speed up the recovery after the pandemic. The chancellor is also setting up a “better regulation committee” to review regulation in Britain now the country is outside the EU, to try to better stimulate growth and attract new investment.
“Business support needs to go in parallel with the tiering of restrictions. We are not going to have an overnight opening up of the economy, so it would be wrong to end support for business overnight.”
SEISS Gender Inequality Highlighted
Campaigners are bringing a judicial review against the Chancellor on Thursday 21 January, for indirect sexual discrimination. Pressure group Pregnant Then Screwed are calling for rapid changes to the Treasury’s raft of financial support packages, since the economy cannot wait until budget day, and neither can individuals acutely affected by the economic fall out, of the now year-long effects of the pandemic.
They say the way the self-employed income support scheme (SEISS) is unfair to around 75,000 women who’ve taken time off for maternity leave during the qualifying period. When asked why he had not exempted periods of maternity leave from the self-employed grant calculations he responded that: ‘’for all sorts of reasons people have ups and downs and variations in their earnings, whether through maternity, ill-health or others.’’ Campaign group Pregnant Then Screwed say: “We felt we had no choice but to start legal proceedings,” after Mr Sunak compared maternity leave to taking a sabbatical.
The government insists using a three-year average is the best way of reflecting a self-employed worker’s income. Joeli Brearley, CEO and founder of Pregnant Then Screwed, explains, “The government has had 9 months to amend this scheme so that it doesn’t discriminate against women; but they have chosen not to. For some, this drop in income has left them and their young family in desperate poverty; while their male colleagues are in receipt of the full benefit.” Which sends a poor message about the government’s agenda for gender equality and closing the pay gap.
Self-Assessment Deadline Extended
On 25 January HMRC announced that self-assessment customers will not receive a penalty for their late online tax return if they file by 28 February.
Taxpayers are still obliged to pay their bill by 31 January. Interest will be charged from 1 February on any outstanding liabilities. Taxpayers who cannot afford to pay their tax bill on time can apply online to spread their bill over up to 12 months. But they will need to file their 2019 to 2020 tax return before setting up a time to pay arrangement, so HMRC is encouraging everyone to do this as soon as possible.
The Association of Chartered Certified Accountants (ACCA) lobbied the Chancellor to extend the deadline for self-assessment tax returns beyond 31 January 2021 warning that failure to do so could land millions of hard-hit entrepreneurs with fines totalling £250m.
ACCA said its members have highlighted several areas where the pandemic has intensified familiar filing deadline difficulties, as well as introducing new ones:
- A further national lockdown
- Increased need for individuals to isolate
- The worsening response times to queries raised with HMRC
- Requirement for members of staff to deal with childcare as a consequence of schools being closed
- Fewer resources available for January than planned
- Entirely new government schemes to account for; CJRS, SEISS and LRSG
The ACCA urged HMRC to reconsider and extend the deadline until the end of the tax year, in April in order to provide relief for struggling businesses. Glenn Collins, ACCA head of technical advisory and policy says that the current ramping up of pressures comes at the end of what has been an unprecedented year for accountants, as they have had to support clients with a wide range of entirely new measures, including the coronavirus job retention scheme (CJRS), self employed income support scheme (SEISS) and local restrictions support grant (LRSG), as well as advise those who have received no government support and try to manage the impact of the pandemic on their own staff and businesses. For all these reasons and more, the economy cannot wait until budget day for further relief to be announced. We will bring you the latest news as it happens. Our business finance specialists are on hand to help and advise you throughout these challenges.
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