The Confederation of British Industry (CBI) has outlined the support measures the UK government needs to take ahead of the Budget, to help protect businesses through the spring as the coronavirus pandemic continues.
In a letter to the chancellor of the exchequer Rishi Sunak, the CBI has also recommended actions that should be taken at the Budget to work towards a sustained economic recovery by stimulating business investment.
Ahead of the Budget, the CBI wants to see an extension to the Coronavirus Job Retention Scheme beyond April to the end of June, and a commitment to targeted support thereafter to give firms the certainty they need to protect jobs. It also wants repayment periods for existing VAT deferrals to be lengthened until June 2021 at the earliest, and allow firms to defer Q1 2021 VAT bills due now for twelve months. The CBI also suggests an extension to the business rates holiday for at least another three months for businesses forced to close under current restrictions and expanding relief to their supply chains.
Other recommendations from the CBI include delivering a ‘Pay As You Grow’ scheme for Bounce Back Loans, including extending capital and interest payment holidays for a further six months. It also wants the government to ensure that the Coronavirus Corporate Financing Facility scheme is kept open until the end of June 2021.
The CBI has also asked for details of a successor to the Coronavirus Business Interruption Loan Scheme to be announced, and for the government to work with Local Authorities to ensure existing discretionary grants are in businesses’ bank accounts by the end of February 2021.
With a comprehensive reform of the business rates systems at the top of its list to help economic recovery in the UK, the CBI also recommends freezing the Universal Business Rate (UBR) for the remainder of the current revaluation period and lowering it at future revaluations to a more sustainable level.
It also suggests introducing new relief for businesses that invest in the energy efficiency of their property, and upgrading their fixed machinery to improve productivity and energy efficiency, as well as removing transitional arrangements which prevent businesses from benefiting immediately from a reduction in property values, and allowing businesses to more easily access relief for partly occupied properties.
The CBI also has a number of recommendations for driving innovation spending by the government and UK businesses, such as introducing a new research and development (R&D) tax credit for capital expenditure and reduce match funding requirements for R&D grant funding. It further suggests an ‘Invest to Grow’ scheme to spur small and medium-sized business spending on productivity enhancing digital technologies.
Incentivising greater business investment on retraining and upskilling was also proposed by the CBI, as well as evolving the apprenticeship levy into a flexible skills and training levy to unlock business investment in accredited training, and transforming job centres into ‘jobs and skills hubs’ to help people to retrain.
Tony Danker, director-general of CBI, commented: “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.
“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 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.”