Chancellor's statement receives cautious welcome from businesses
Business leaders have cautiously welcomed chancellor Rishi Sunak's 'mini budget', in which he announced a string of support measures to help businesses recover from the the coronavirus pandemic.
Measures included bonuses for company's that retain furloughed employees a new scheme designed to encourage companies of all sizes to recruit 16-to-24-year olds. Hospitality businesses will also benefit from a cut in VAT rates, down to 5 per cent.
However, while these announcements should help in the short-term, Frank McKenna, the Downtown in Business chief executive, was of the commentators questioning whether this would make a meaningful long-term impact.
He said: "I welcome some of the measures the chancellor has announced. The Jobs Retention Bonus of £1,000 to keep furloughed workers is very positive, the Kick Start Scheme, incentives to create apprenticeships, the hospitality VAT reduction, Green Grants, and the Stamp Duty change are all steps in the right direction.
"However, I don’t believe the Department for Work and Pensions are best placed to receive £1bn to provide coaching and guidance. I think that could have been better spent directly with businesses. The government will also need help from local authorities to deliver the Kick Start Scheme, but they have already been hit by major cuts in recent years.
I question whether these initiatives will create long-term sustainable jobs
"Our Downtown in Business Recovery Plan stated the Government need the support of devolved bodies, Regional Assemblies and local councils to get us out of recession quickly, but we haven’t seen much mention of them, which is disappointing."
He added: "The ‘Eat out to Help Out’ scheme looks gimmicky. Whilst it will encourage staycations and get some people back into bars and restaurants, the truth is, it looks incredibly complex and expensive to administer, people won’t be able to use them if there is a Covid-19 spike in their area, it does nothing for the wet-led pubs and it is only for August. A more ambitious solution would have been to introduce a ‘rent furlough scheme’ for the hospitality industry – that would have been more equitable and more impactful.
"I question whether these initiatives will create long-term sustainable jobs. They will probably help the economy in the short-term, which is important, but I am not sure they will fix the economy in the medium to long-term. The Chancellor’s proposals are a start, but he will be tested again, in the autumn, to come up with a more robust long-term plan for our economy."
It was more about minimising the pain over the coming months rather than setting out a long-term and sustainable fiscal strategy.
Meanwhile Jane Parry, managing partner at PM+M, said: "The actions taken by the government since the start of the coronavirus crisis including the bounce back loans, subsidies and grants that have been distributed have undoubtedly made a huge impact and saved many businesses going to the wall. However, despite the past four months seeing the biggest state intervention in the private sector since the Second World War, there is a still long way to go and with the furlough scheme set to be wound down by October, major job losses in certain sectors will gather pace - no matter what new measures are introduced.
"The Summer Statement was needed, but it was more about minimising the pain over the coming months rather than setting out a long-term and sustainable fiscal strategy. In reality, it was just a sticking plaster and the real test will be the Autumn Budget and Spending Review by which time the current deficit of around £300bn is set to have grown even more.
"This is when the chancellor’s popularity, and his options, might come under real pressure, as stimulus spending will have to potentially start to fall if the economy doesn’t start picking up."
Susan Clews, the chief executive of employment advisory service Acas, said: "Our services have seen redundancy as a top workplace query over the past few weeks. The government’s new plan for jobs will give some relief to many businesses and workers that are deeply worried about the detrimental long term impact of Covid on their livelihoods.
"The chancellor’s package of measures are designed to help the economy recover and encourage job retention and creation. This will be welcomed by many young people who are anxious about unemployment and hospitality businesses that need a boost to help them recover after lock down."
Hannah Essex, co-executive director of the British Chambers of Commerce, added: "In the coming weeks the government needs to consider taking further bold steps in response to this crisis.
"Our research shows investment intentions have been hit hard during the pandemic, and so the government should be preparing new incentives for business investment in the UK, including extending the £1m Annual Investment Allowance for a further two years and broadening its scope to include training, the transition to net zero and spending on making workplaces Covid-secure.
"Businesses face cliff-edges in the autumn as existing support winds down, and so the government must consider reducing national insurance contributions and extending existing loan schemes. Many businesses are concerned about how they will survive in the event of a local lockdown, and we ask the Government to urgently set out what support will be available if that happens.”
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