// CBI calls on Chancellor to extend furlough scheme & business rates holiday before the Budget in March
// Furlough currently set to finish at the end of April and the rates holiday closes at the end of March
The UK Government should announce an extension to the furlough scheme and business rates holiday before the Budget in March, the Confederation of British Industry has said.
In its Budget submission to Chancellor Rishi Sunak, the CBI said businesses – including retailers – cannot be expected to wait nearly two months to know whether support will be extended beyond the current deadlines.
The furlough scheme is currently set to finish at the end of April and the business rates rates holiday closes at the end of March but many businesses will already be planning spending for the year ahead.
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“Our Covid-related business support asks are about moving now or soon, rather than waiting until March 3… Business support needs to go in parallel with the tiering of restrictions,” CBI director-general Tony Danker said.
“Sudden stops and cliff edges really don’t help and I don’t think anybody in government believes that we’re going to have a sudden opening up with the economy.”
The CBI said business rates would become a serious problem if not addressed ahead of the Budget, with the one-year rates holiday for retailers, leisure and hospitality sectors due to end at the end of March.
This should be extended by at least three months and the government should commit to a significant overhaul of the commercial property tax, which remains the highest in the G7, the CBI said.
Other measures being urged by the CBI include ensuring the Budget is focused on job creation and creating a net zero economy to drive growth, including a review of fuel duty.
Tax credits for research and development should also be introduced with particular focus on digital technologies, it said.
The CBI added that first, the government must announce how businesses can continue to be supported through the Covid-19 pandemic prior to the March 3 Budget.
CBI chief economist Rain Newton-Smith said: “What we are saying to the Chancellor is you need to act now on some of that business support just to help to really build that bridge to the other side of this crisis.
“We know that businesses are taking decisions now and we really need to target that support at the sectors that are particularly challenged, where that resilience is particularly low.
“Furthermore we really need the Chancellor to act on some of the longer term things that will really get business investment going and put this recovery on a much more sustainable footing both now and into the long term.”
Some economists have suggested taxes will need to go up for covering the cost of the pandemic, but Newton-Smith said it would not be sensible for an increase to take place now.
“We don’t see now as the time to be increasing taxes,” she said.
“You need to wait until one or two years after you’ve seen the trough in GDP when growth is back on a sustainable trajectory before really trying to think about either significant cuts in government spending or significant increases in taxation.”
with PA Wires