The furlough scheme is due to end on 30 April. With certain restrictions set to remain for at least another four months, it is vital that the Chancellor extends the scheme.
Businesses, entrepreneurs and employees need certainty – this instils confidence, a vital ingredient for businesses and households to plan investment and expenditure. It will take several months post the full lifting of the lockdown restrictions for businesses to start operating normally.
The latest results show that approximately ten million jobs from 1.2 million different employers are furloughed in the UK. It is critical that this population is supported otherwise the economy will suffer lasting effects.
Many businesses, especially those, both big and small, which are operating in the hardest hit sectors of retail, leisure, hospitality, and tourism, simply do not have the cash reserves to survive whilst the economy gradually reopens.
While the vaccine program continues to operate at pace, the pandemic has had a deep impact in the UK and it is likely that the scars it leaves on business and household confidence will last for a long time. It is vital that the Chancellor adopts a means-tested, tapering approach to the easing of the economic lockdown using economic data not dates.
Extending the furlough scheme is a vital measure, but this needs to be supported by a basket of other measures which provide a clear short- and long-term road map to instil much needed business, household and consumer confidence.
The Chancellor must adopt a tapering off approach to the furlough. He must also extend the business rates holiday and introduce a deferral or subsidy on employers’ National Insurance and extend the VAT rate to support the hard-hit sectors. Cash flow is vital to business. The Chancellor must also be imaginative in how he approaches revising existing loan schemes, including deferring repayment timelines, and introducing new funding options which clearly signal to businesses and entrepreneurs that the Government supports them, especially small and medium sized businesses (SMEs) which are the backbone of the economy.