Presenting ConservativeHome’s Spring Conference online fringe events

17 Mar

We’re very pleased to announce that, following the success of our online fringe events during last year’s Conservative Party Conference, ConservativeHome will be putting on a programme of free, online fringe events during the Conservative Party’s Spring Conference, on Friday 26th and Saturday 27th March.

Click here to see details of our full line-up of speakers and topics. We do hope that you can join us for discussions ranging from the reform of business rates and the future of the asylum system to the Government’s plans to fulfil its promises on levelling up and net zero, featuring guests including Sajid Javid, Robert Jenrick and Paul Scully.

As ever, ConservativeHome’s journalists will also be putting your audience questions to our special guests.

All of our events will be broadcast for free on the Conservative Party’s conference website, the ConservativeHome YouTube Channel and via Zoom. Zoom signup links for all events can be found on our listings page.

Alan Mak: A week on from the Budget, it’s clear that it will boost innovation and productivity

10 Mar

Alan Mak is Vice Chairman of the Conservative Party, Co-Chairman of the Party’s Policy Board and MP for Havant

The pandemic has had a significant impact on the British economy. Over 700,000 people have tragically lost their jobs and the economy has shrunk by 10 per cent – the largest fall on record. And the impact could have been far worse had it not been for the Chancellor’s support schemes that have protected jobs and livelihoods throughout, from the furlough scheme to billions paid out in business grants and loans.

Last week’s Budget needed to continue this support for the economy in the short term. But crucially, it also needed to lay the foundations for building the economy of the future. What this country needs – and what Conservatives can wholeheartedly champion – is a robustly pro-growth, pro-enterprise and pro-innovation economy to turbo-charge our exit from the pandemic and help Britain lead the Fourth Industrial Revolution, all while remaining internationally competitive.

Last Wednesday, the Chancellor delivered, with a series of policies that will ensure technology and innovation are at the forefront of our economy. ConservativeHome readers agreed, overwhelmingly backing the Budget with 58 per cent saying it was “good” or “very good” in this site’s latest survey, as did voters polled by YouGov.

Last July, I proposed an IT scrappage & upgrade scheme to equip our promising start-ups, SMEs and scale-ups of tomorrow with better software and technology, in order to enhance productivity which has historically lagged behind our competitors. For years, governments have needed to target the least productive SMEs which have invested insufficiently in the latest software, automation or information technology. And too often, our brilliant small firms don’t have the time or resources to get the extra skills or technology tools they need to be more productive.

That’s why I warmly welcome the Chancellor’s two new Help to Grow schemes, specifically aimed at boosting the productivity of our small businesses. Help to Grow Management will help SMEs get world-class management training through government-funded programmes delivered through British business schools, with businesses contributing just £750 or 10 per cent of the cost of the course.

And Help to Grow Digital will level up the digital skills of our small businesses with vouchers entitling them to 50 per cent off the purchase of new productivity-enhancing software, up to a total of £5,000 each. Both these schemes are exactly what’s needed to tackle the UK’s longstanding productivity challenge, while laying strong foundations for the pro-growth future economy we all want to see.

The Budget went further by delivering other measures which high-growth, innovative companies should welcome. These businesses account for just one per cent of companies in the UK, but generate an amazing 80 per cent of our employment growth.

That’s why consultations to find ways to improve our research and development regime and reform the Enterprise Management Incentive scheme to support growing companies retain talent, are encouraging. Furthermore, ensuring firms have sufficient access to capital is vital, which is why the new Future Fund Breakthrough initiative, successor to the Future Fund, is welcome support for innovative tech businesses to access finance, match-funded by Government.

As the first MP of British-Chinese heritage, I also believe a global outlook and attracting world-class talent to the UK is pivotal to our future economic success. That’s why visa reforms aimed at making it easier for highly-skilled people to come to Britain are especially welcome. These include a new unsponsored points-based visa, and new simplified processes for scale-up founders and entrepreneurs.

These Budget measures to support our businesses and turbocharge our future economic growth build on the Treasury’s other impressive pandemic support schemes, such as extensions to the furlough scheme; temporary VAT cuts and business rates relief; two more self-employment grants; new recovery loans to help businesses access finance; and Restart grants of up to £18,000 for businesses who have been particularly hard hit. Overall, that’s over £400 billion of support this year and next to protect our economy.

I also welcomed the Chancellor’s frankness about the need to begin repairing our public finances. We cannot maintain the current levels of borrowing and debt and expect to be able to respond with another £400 billion when the next crisis hits. And as Conservatives, we believe in sound money and keeping our borrowing under control hence the Chancellor also explained why corporation tax is scheduled to rise for the biggest, most profitable businesses in two years’ time.

The unprecedented ‘Super Deduction’ policy to encourage companies to invest in capital assets such as new machinery – an effective tax cut worth around £25 billion – will also be key to incentivising our SMEs to adopt the latest productivity-enhancing technology. Last year I wrote about the dampening effect on capital expenditure (capex) and investment caused by Coronavirus already being large and destructive. The Bank of England predicted a 26 per cent drop in business investment for 2020. In 2009, as the financial crisis erupted, the fall was 16 per cent by comparison. The Super Deduction can help reverse the damage to our country’s technology base.

What we needed to hear from the Chancellor was a mixture of realism about keeping the economy going now, plus a dose of optimism for the future, by laying the groundwork for British businesses to lead the Fourth Industrial Revolution. We received both, building strong foundations for Britain’s growth and recovery.

Richard Holden: We shouldn’t try to win a spending arms race with Labour in this Budget – which we would lose anyway

1 Mar

Fight Fitness Guru, Consett, Co. Durham

During the last fortnight, the white wasteland of frozen fields has given way to the flora of spring in County Durham.  The thaw in the land of the Prince Bishops is being met with a broader feeling in the towns and villages that spring is on the way.  With 20,000,000 vaccinations done and accelerating, as well as the Prime Minister’s roadmap providing clarity for the future, there is a real feeling that the tide is turning.

This week’s Budget must be another step along that road.  However, with so many competing concerns it will be a difficult balance to strike.  To get it right, it’s going to be essential to zoom out and look to where we want to be in a few years’ time.

Our economy has taken a pounding because of Covid-19.  Three hundred billion pounds in extra spending and support, paying people’s wages through furlough and supporting jobs and businesses has been provided.

Three hundred billion pounds extra: that is wartime levels of additional expenditure. For context, it is more than twice the size of the NHS budget annually. It’s an extra £4,500 for every man woman and child in the UK, or about £12,000 for every income-taxpayer in extra spending: money that’s had to be borrowed.

The support has been colossal and necessary. It has protected businesses and jobs and crucially will enable our economy to bounce back as quickly as it can. But this backing wouldn’t have been possible if the Government hadn’t taken the necessary decisions to keep spending under control during the last few years.

Colloquially, this point is made frequently by my constituents, along the lines of: “I’m glad it was you lot in and not Labour. If they’d been in ,God knows what would have happened.”

Which takes me to the political.  One of the biggest gateways to so-called “Blue Wall” voters switching from Labour to Conservative was Jeremy Corbyn. But this wasn’t just because of the terrorist sympathising and antisemitism. Or Keir Starmer’s policy of betraying democracy over Brexit. It was also because of Labour’s economic credibility.

People stopped listening to Labour’s promises when they became increasingly outlandish.  Remember them? Free broadband for all, give WASPI women £30,000 each, cancel student debt and make university education taxpayer-funded. The list went on – all with no plan to pay for it: it was fantasy economics that lacked basic credibility.

This is where we Conservatives now need to be careful, and why Rishi Sunak needs to tread a fine line. We cannot, nor should we wish to, win an arms race with Labour over who can spend more taxpayers’ cash.

We’ve not spent the long, hard yards of the last decade, undoing the catastrophic position Labour left in 2010, to let that credibility go. The reason we’ve been able to support the country through the global pandemic is because we’d had credible spending plans for the last decade. The reason Labour couldn’t win in 2010 is because Labour believed its own hubris about having ‘abolished boom and bust’ and, to nab a much-loved phrase from George Osborne, “failed to fix the roof while the sun was shining.” And the result was the famous note from Liam Byrne, then Chief Secretary to the Treasury: “there is no money left.”

Given such an analysis of where we are, then: what’s next? The budget must focus on three things:

  • Recovery. Allowing the country, especially our hardest hit sectors to bounce back from Covid – and in doing so avoid a massive spike in unemployment.  This week, I led 68 Conservative backbenchers in writing to the Chancellor about support for pubs (massive employers of young people) via keeping beer duty down. It’s vital that he also allows our high streets breathing space regarding business rates. And for families in constituencies like mine, where for so many a car is essential, fuel duty rises, which Conservatives have found hard against for a decade, need to be avoided.
  • Delivery. Keep building towards our key manifesto commitments on public services: more police, more nurses, crucial infrastructure and deliver on the levelling up promise that was made.
  • Credibility. Long-term economic stability with borrowing under control to allow us to keep our debt – and crucially our debt interest payments – under control.  We can’t just hope that interest rates stay this low forever: they won’t. Only a balanced plan will allow the Government the space to deliver on the first two objectives of recovery and delivery.

It’s a tall order, and the Chancellor needs to be clear, honest, and fair in what he spells out. Those who’ve profited during the pandemic and those with the broadest shoulders should take the lion’s share of slack as we now deal with the consequences of it.

As for Keir “Goldilocks” Starmer – naturally, nothing will be ‘just right’.  But he won’t come up with any other real proposals, either. He’s opposed to anything that will raise revenue, but Labour MPs will doubtless demand more spending.  The party is all over the place, with a front bench hopelessly out of its depth, and a broader one so divided as to the way forward that it’s hardly a surprise Sir Keir is unable to get them to agree on anything but to abstain.

So Labour’s economic credibility will remain in tatters. We need ours to remain strong.

This spring in North West Durham and across the “blue wall”, let’s ensure that the growth we see is built to last. Unsustainable borrowing might be Labour’s answer, but it can’t be ours. Without doubt, at some point, winter will come again.

And when it does, we’ll need to respond to it from a position of strength with flexibility – as we have this time.  The electorate will not forgive us is we don’t ensure long-term credibility. Without it we put both a sustainable recovery from the global Coronavirus pandemic and delivery of our manifesto in jeopardy.

Perhaps the simplest way of putting it on the Budget is: it’s all about economic credibility, stupid. Because come 2024, it certainly will be.

Andrew Gimson’s PMQs sketch: This unbrushed, unkempt PM reckons he can beat the Nats

10 Feb

“I have the confidence to do things my own way,” Boris Johnson’s hair declared.

It was this week messier than ever: unbrushed, unkempt, uncut, as if the Prime Minister had washed it and fallen asleep with it in a wet and tangled mess, so that when he awoke it would stick out in every direction.

Sir Keir Starmer was left to uphold respectability. He invited Johnson to extend business rate relief beyond 31st March.

The PM said business would have to wait until the Budget.

Sir Keir accused Johnson of procrastination: “Let me let the Prime Minister into a secret. He can take decisions for himself and he doesn’t have to leave everything until the eleventh minute.”

The PM does sometimes leave things until the eleventh hour, or even until the last minute, compared to which the eleventh minute sounded quite prompt.

He retorted by mocking the Leader of the Opposition for “a damascene conversion” to the cause of business. Sir Keir said he was “not going to take lectures from a man who wrote two versions of every column”.

This exchange of jibes would have benefited from being conducted in front of a live audience. When the Commons is full, there is at least a chance that PMQs will come alive.

There is then a danger then of things going wonderfully well, or horribly wrong, within the space of a few words. This ghostly Chamber can’t reproduce that threat.

Ian Blackford, appearing for the SNP by video screen from the Isle of Skye, accused the Government of leaving “1.3 million children under five living in poverty”.

Johnson said “we bitterly lament and regret the poverty that some families suffer”, but went on to observe, somewhat unexpectedly, that there is a “a profound philosophical difference” between the Scottish Nationalists and the Conservatives.

The SNP, he suggested, “is morphing into an ever more left-wing party that believes fundamentally it is the duty of the taxpayer to pay for more and more and more. We want to get people into jobs, Mr Speaker.”

Here is a line of which we can expect to hear more during the Scottish elections, when the Nats will be accused of trying to solve every problem by building a socialist state at the expense of frugal, hard-pressed taxpayers.

As if to distract from the seriousness of what he had said, Johnson continued to making teasing references to the Scottish Nationalist Party, instead of the Scottish National Party.

The Speaker, Sir Lindsay Hoyle, continued to reprove the PM for this, and for going on too long, and on one occasion quite rightly shut him up.

Johnson remained irrepressible. Here is a PM who greatly enjoys being underestimated, and who thinks he can win.

Andy Street: We must do more to save struggling town centres. Tackling business rates is a good place to start.

17 Nov

Andy Street is Mayor of the West Midlands, and is a former Managing Director of John Lewis.

Our traditional town centres and high streets have faced unprecedented challenges in recent times. First, our town centres were impacted by the drive towards out-of-town retail parks. Next, the rise of digital shopping impacted, as doorstep delivery hit footfall.

Then came Coronavirus, and restrictions that have brought town centres to a juddering halt. Now, in what retailers call the “Golden Quarter” – the critical run-up to Christmas – they are coping with another month-long closure.

Through the Future High Streets Fund and Towns Fund, the Government is backing town centres, on top of the unprecedented support already shown for business throughout the pandemic. I believe that we must double down on this investment to secure the future of our high streets, but the challenge we face is also reliant on generating fresh ideas and local buy-in. It is not just about money – it is about how we spend it too.

While 2020 has brought unprecedented challenges, I firmly believe in the future of our towns and cities, and evidence suggests that many others do too.

During the Covid-19 pandemic, many reconnected with their local high streets. In lockdown, many chose to return to traditional butchers and grocers rather than face supermarket queues. When volunteers mobilised to deliver food to the vulnerable, it was often the local convenience store that provided a base, looking out for their regular customers.

And, when restrictions relaxed, people wanted to reconnect with town centres. Here in the West Midlands, Halesowen Town Centre saw the biggest bounceback in trade of anywhere in the country. Despite all the challenges, towns like this have a future because we are fundamentally a social species. After so long apart, we want to return as soon as possible to culture, to sport, to conferences – social pursuits that are so often in town and city centres.

However, it’s clear that investment is needed. Why? Our high streets matter. They matter because they are the heart of local communities. They matter politically, as they provide a tangible, visible sign of economic success. The Government recognises this, through its Towns Fund investment programme, as it seeks to “level up” the economy and reach out to former “Red Wall”’ areas. But we must think afresh.

Before Covid struck, we drew up our West Midlands blueprint to revitalise local high streets, the ambitions of which are even more pertinent today.

The blueprint aims to encourage a more personal shopping experience – the type you can’t get from a phone screen – while bringing local services into town centres, broadening appeal beyond retail.

We want to encourage more urban living in our town centres, which should also be the natural place for public services. The blueprint also aims to make our town centres greener and cleaner – with more opportunities to cycle and walk – and safe and secure with good lighting, proactive policing and CCTV.

Above all, strong local leadership must drive these ambitions, to build the partnerships and attract the investment needed. A key part of that leadership is pushing for a fairer tax system that levels the playing field between high street and online retailers.

Taxation remains a real issue. If a swift bounceback is evading us next year, then exemptions will be vital – but we must also tackle the long-term problem of business rates. They are simply outdated and, given the financial challenge we now face, the often-suggested online sales tax looks even more attractive.

Investment is also key to repositioning our high streets. In the West Midlands, we are putting millions on the table to back our blueprint.

Schemes vary in size from our £95.5 million investment in the Coventry City Centre South scheme, which will transform the City’s future, to £5 million towards a transformation of Kingshurst, in Solihull, creating a new village centre with shops, medical and community facilities.

Sometimes, it’s about removing eyesores that have blighted places for decades. The demolition of the Cavendish House office block symbolises that the regeneration of Dudley Town Centre is no longer a hope – it’s happening, thanks to regional funding. In West Bromwich, we are pulling down the hideous Bull Street Car Park, reclaiming the site to build new homes in the town centre – bringing much-needed footfall to existing businesses.

We’ve backed opening hotels in Walsall Town Centre and the heart of Coventry, and even helped bring an old rival from my John Lewis days, Marks and Spencer, into Sheldon’s high street in Birmingham.

Targeted investments like these demonstrate a confidence in the future of communities, and we are determined to do more locally. However, I want these investments to be a pilot for securing hundreds of millions from the Government’s Future High Streets Fund and Towns Fund. Across the region we have seen enthused communities, businesses and councils come together to work on their bids for this funding.

Perhaps the most ambitious of these is in the Black Country, where an energised Wolverhampton partnership is pitching for £48 million not just in the city centre, but crucially for high streets in Bilston and Wednesfield too. This funding would go alongside our own investment in the City’s future, like the £150 million new railway station and metro link which is nearing completion.

Elsewhere in the Black Country we have more towns in the running for game-changing investment – Brierley Hill, Bloxwich, Dudley, Rowley Regis, Smethwick, Walsall and West Bromwich – each with their own distinct pitch.

A great example is Brierley Hill – a traditional town centre that was badly hit by the opening of the huge Merry Hill shopping centre in 1990. Now we have the chance to reconfigure the town centre to open it up and ensure that shoppers visiting big retailers like Asda can easily access the rest of the high street. The extension of the West Midlands Metro into Brierley Hill will link it to the wider region.

Communities around smaller suburban high streets are grasping the opportunities of the Future High Streets Fun too. Erdington, in Birmingham, has a brilliant scheme designed not only to boost retail but to make the best of their assets, by opening up the historic Churchyard area to provide better, high-quality open space. They also want to turn the boarded-up Victorian baths into a job-creating business hub.

Too often the debate over “levelling up” is reduced to North versus South. Here in the Midlands, where the Red Wall was first breached, we are engaging with the opportunities to bring investment into our communities that will drive tangible, visible improvements.

The Government is putting in money. But as we plot our way out of the pandemic, it must be ready to double down on this investment, while enthusing communities to play a part in revitalising the civic centres they so cherish.

Matt Vickers: I know from experience why the retail sector matters. So have your say on rates today.

30 Oct

Matt Vickers is the MP for Stockton South.

The debate around the challenges facing the retail sector, and particularly our high streets, isn’t new. Sadly, the current pandemic has only exacerbated the situation. As a former Woolworth’s employee and a keen Pic and Mix eater, I know only too well the high street titans who have been lost in this battle.

While the pandemic has left many industries in a state of flux, it has added to the challenges facing the retail sector rather than acting as the sole source of disruption.

Although we cannot deny that lockdown restrictions in the earlier part of the year were necessary to protect the health of the nation, they have had a devastating effect on the already dwindling footfall that many high streets and retail centres have experienced over recent years.

With people being asked to stay at home, more and more of them have turned to online traders to meet their needs. Complacency has meant that we have learned to live with online and physical retailers living in parallel. While we have known for some time, that online shopping has exercised a greater dominance, Covid-19, it feels, is giving online retailers full superiority.

From the incredible bum-wiping bonanza of 2020 that saw people stocks piling toilet rolls (which they probably still haven’t got through) to the huge demand for hand sanitiser, retail and supply chains were put to the test.

While recent figures from the British Retail Consortium show retail sales to September rebounded since re-opening in June, they remain significantly lower than sales at the beginning of the pandemic.

More worryingly, these figures indicate potentially permanent changes in consumer behaviour, since working from home has been normalised for many, and online sales continuing to boom despite shops being open. City centre retailers in particular have not benefited from increased footfall, as office blocks stand empty.

In less than six months, we have seen an industry worth nearly £400 billion, that directly employs three million people, encounter a seismic shift; the result of which could be hundreds of thousands of livelihoods destroyed.

While we have painted a bleak, yet sadly accurate picture of the retail sector, there are potential solutions to reverse the decline. If we want to see our high streets flourish once again, where our memories no longer drift back to a bygone era of nostalgia of what we have lost, we must be embrace bold, innovative and forward-looking policies.

The Government must cut the burdens that restrict business, and allow the entrepreneurial spirit to blow the wind of change through our high streets.

Our retail workers have been on the frontline in this pandemic, whilst others sought safety in their own home. They alongside our doctors, nurses and health professionals, are the key workers in this battle. And while they battle to supply us with the goods we require, it is sad to see that in recent times an alarming trend has emerged with the number shop workers being abused and assaulted increasing.

A recent British Consortium survey found that more than 400 retail workers face violence and abuse every day, often as the result of staff challenging shoplifters, or more recently trying to implement Covid-19 guidelines.

Locally, in my constituency of Stockton South, I have spent a great deal of time meeting retailers, and even worked a shift in a local Home Bargains (another past employer of mine). I have been delighted to hear how so many of them have benefited from the various support packages since this crisis began, whether that in question has been the business rates holiday or the world-leading furlough scheme.

There is that old adage, ‘the customer is always right’. But while that may be the case, there could be no customers without the staff that work so hard to keep our retail sector going. It really is an industry for the people and run by the people. It is our duty as policymakers to cultivate a supportive environment to ensure the industry has a thriving future.

An integral way in which we do this in the months ahead will be the biggest consultation on the issue that affects the industry most – a fundamental review of business rates and then publishing the terms of reference for the review at the Spring Budget. This call for evidence seeks views on how the business rates system currently works, what issues need to be addressed, ideas for change and a number of alternative taxes.

When the evidence and recommendations come in, we must listen, and we must do all we can to support the heart of the British economy. So have your say today.

Simon Fell: Why there should be a permanent cut to business rates for retail

19 Oct

Simon Fell is MP for Barrow & Furness.

As Benjamin Franklin famously said, “in this world nothing can be said to be certain, except death and taxes.” Our business rates regime assures both: as a tax it is one of the biggest contributors to the death of high streets up and down the UK.

I see the consequences of this first hand in my own constituency of Barrow & Furness. Where once the high street was the beating heart of Barrow, the life is seeping away. Dalton Road, the high street in Barrow, was where local residents met up to shop, gossip and laugh. My constituency surgeries are full of residents and business owners telling me that something must be done.

And we must do everything possible to turn the tide. Covid-19 has hit the high street hard. But even before the onset of the pandemic, retailers – large and small – were struggling to cope with the ever increasing rise in business rates.

It is a regressive tax which is not fit for purpose. Since 1990, business rates receipts have increased from £8.8 billion to £27.3 billion in 2017/18, an increase of 210 per cent compared with a 75 per cent increase in inflation. The UK now has the highest property taxes in Europe, nearly double the rate of the next nearest country, and business rates is a large reason why.

It is a tax which hits hard-working business owners, it is a tax which is a barrier to investment, and it is a tax which costs jobs.

It imposes a double whammy on the high street too: we haemorrhage ‘anchor’ stores like M&S and Topshop which makes it harder to attract shoppers to our independent stores. Those independents are the plucky heroes of Barrow’s street scene and they thrive against all odds. We can’t allow them to pulled into the same downwards spiral.

This tax also hits the north hardest. New research today by WPI Strategy categorically proves that the business rates burden is highest in northern towns such as Barrow and Leigh. Using store data from the thousands of Tesco stores across England and Wales, the paper shows 75 per cent of constituencies in the top 10 per cent of rates burden are in the North and Midlands, compared to just 26 per cent in London and the South. This is because the tax rate does not mirror economic performance, so for areas facing economic challenges the burden is much higher.

The research shows that shops in the top 50 constituencies most burdened by rates have four times the business rates burden of those in the bottom 50. If the top 50 constituencies faced the same burden as those in the bottom 50, they would save £50 million a year.

It is even more important for constituencies such as mine that the Government does all it can to ensure retailers can survive and thrive. Retail makes up 25 per cent more of the job market in the North, Midlands and Wales than it does in London

During Coronavirus, retailers such as the big grocers, took on tens of thousands more staff to help feed the nation. The sector is also a stepping stone into the world of work for many people, offering apprenticeships for youngsters up and down the UK.

But retail provides more than simply an economic boon to northern towns. Shops play an important psychological and social role within neighbourhoods. They are often the only touch points for some of the more vulnerable members of our community.

Encouragingly, the Chancellor recognises the value of retail to our social fabric and economic prospects. At the start of the pandemic he announced that retailers as well as businesses in the hospitality and leisure sectors in England will not have to pay business rates for a year.

This was an extremely welcome move. There is further work going on here too: Town Deals and Future High Street Funds offer the chance to renew the high street and town centres like mine. But that renewal must be backed.

When the rates holiday comes to an end next year, we must continue to relieve the pressure on retailers. That is why I’m calling on the Government to introduce a permanent cut to business rates for retail. A 20 per cent reduction in the overall level of rates would make a huge difference to shop owners in towns like Barrow, Bury or Bolton. It would enable them to retain jobs, keep the doors open, and reduce the number of boarded up stores on our high streets.

Of all the low-hanging fruit available to the Government’s levelling up agenda, reducing business rates would be an easy win with an immediate positive impact.

Allie Renison: Sunak wants to link funding to viability. He’s right – but he must help to keep firms viable in the first place.

9 Oct

Allie Renison is Head of Trade and EU Policy at the Institute of Directors.

Emergency government intervention in the market should in principle seek to target endeavours that have fundamental viability – of that, most are agreed.

At the start of the crisis, this principle was rightly balanced against the need to get money out the door quick – every day of delay would have meant jobs lost. As the pandemic has worn on, it was inevitable that the idea of tying support to viability would come into sharper focus. But while the Chancellor is right to tack towards this principle, we need to make sure we are on same page as to what viability means in the current context.

We should not forget the central role the state is playing in curtailing the normal functioning of industries across the piece. From changing advice on working from home to the omnipresent one to two metre social distancing rules, a significant share of the UK economy is currently rendered far less sustainable than it would be in the absence of these changes. This is not about apportioning blame, but raising the longer-term future of the measures underpinning them.

If the rules and guidance are to shift to relax social distancing restrictions, then it is perfectly reasonable to question the viability of business thereafter. If the message is that these constraints are the permanent or long-term parameters through which we should gauge sustainability, then that message needs to be loud and clear. Either way, the basis on which fiscal and non-fiscal support is given to viable businesses should reflect the extent and horizons of government restrictions. As they change, so too should the flexibility and scope of assistance.

In Rishi Sunak’s endeavour to ensure the Government still carries out its “sacred responsibility to balance the books”, he shouldn’t overlook the part that supporting business will have for the economic recovery. Longer-term viability should not be sweepingly sacrificed at the altar of picking losers in the shorter term.

Alongside grappling with this issue of viability, the Chancellor should set out broad-based measures to give UK plc the shot in the arm it needs – particularly as many SMEs have fallen through the cracks of the initial support schemes. Options for these broadly fall into three categories of focus – protecting and creating jobs, supporting adjustment, and spurring investment. While the Treasury may be mulling tax rises in future, the immediate focus should be on minimising the burden on business for the here and now.

Encouraging firms to retain, (re)train and hire workers in the current climate as the furlough scheme winds down and restrictions continue is undoubtedly a challenge. Of the third of IoD members who still had staff on furlough in September, 60 per cent expected to be able to retain three quarters or more of their workers.

For some businesses, Sunak’s new top-up plans will be enough; but plenty of SMEs at the smaller end will find the price of keeping staff too much. Lowering the adapted Job Support Scheme’s employer contribution for non-worked hours could help in this regard, potentially being funded by removing the job retention bonus (less than one in five directors who had furloughed staff said the bonus would help them retain their employees).

Bold action to help as many firms possible not only hold onto but also create jobs is needed – and cutting the cost of employment is the right place to start. Reducing the burden of Employer NICs, either by boosting the Employment Allowance for smaller firms or lifting the threshold for payments, is one of the top three potential confidence-boosting measures among IoD members.

It is a two-for-one that would both support hiring and provide a one-off cash flow boost to business. Meanwhile, providing new tax incentives to help company investment in training – particularly lifelong learning – would also drive the adult re-skilling needed as firms move towards automation and new digital processes to drive productivity.

Facilitating adjustment will be critical to business confidence as the pandemic evolves – whether that’s returning to normal in a safe way, or exploring a new way of doing things.

Many of our members have said that the reason for their reduced office use was that working from home was proving more effective; expanding the scope of R&D tax credits could be an important tool to help more small firms maximise on the potential productivity gains. Tellingly, investment in digital infrastructure ranked as the top director priority for government to prioritise for spurring an economic recovery.

Lifelines such as government-backed loan schemes and tax deferrals are also crucial measures to extend in helping viable companies continue to weather the storm. Expanding local authorities’ discretionary grant finding will also help for a more appropriately targeted response to help temporarily impacted firms and sectors adjust to localised lockdowns.

And finally, it’s important that measures target the regulatory side too. While the Government has extended some emergency insolvency relief provisions, it needs to do the same for suspension of ‘wrongful trading’ liability to allow firms to seek and access finance during the pandemic.

With new figures out from the IoD showing that the business investment outlook stalled in September after a significant rebound over the summer, it’s vital for the Government to bring forward plans to give industry a boost. In addition to broad-based tax reliefs to harness digital and adaptation technologies, the annual investment allowance cap should be extended beyond 2020.

Additionally, to support growth, a business rates holiday could be introduced on the additional charges firms face when improving or expanding or moving into commercial property. Meanwhile, to turbocharge entrepreneurial growth at a time it is desperately needed, the Treasury should ease restrictions for investing in start-ups and scale-ups by making schemes such as EIS and SEIS more accessible.

Business leaders know that tax incentives at a time of already increased public expenditure to support jobs and enterprise will eventually need to be paid for, but taking action now to stimulate the economic recovery will help lessen and spread the overall burden.

Enabling firms to adjust to a changing landscape of restrictions will help protect jobs, while facilitating business investment will help create new ones. It is this interconnection of priorities the Chancellor must now address and ensure business taxation goes in a productive, efficient direction to support viability, before he can start to focus on balancing the books.

Allie Renison: Sunak wants to link business support to viability. He’s right – but he must help to keep firms viable in the first place.

9 Oct

Allie Renison is Head of Trade and EU Policy at the Institute of Directors.

Emergency government intervention in the market should in principle seek to target endeavours that have fundamental viability – of that, most are agreed.

At the start of the crisis, this principle was rightly balanced against the need to get money out the door quick – every day of delay would have meant jobs lost. As the pandemic has worn on, it was inevitable that the idea of tying support to viability would come into sharper focus. But while the Chancellor is right to tack towards this principle, we need to make sure we are on same page as to what viability means in the current context.

We should not forget the central role the state is playing in curtailing the normal functioning of industries across the piece. From changing advice on working from home to the omnipresent one to two metre social distancing rules, a significant share of the UK economy is currently rendered far less sustainable than it would be in the absence of these changes. This is not about apportioning blame, but raising the longer-term future of the measures underpinning them.

If the rules and guidance are to shift to relax social distancing restrictions, then it is perfectly reasonable to question the viability of business thereafter. If the message is that these constraints are the permanent or long-term parameters through which we should gauge sustainability, then that message needs to be loud and clear. Either way, the basis on which fiscal and non-fiscal support is given to viable businesses should reflect the extent and horizons of government restrictions. As they change, so too should the flexibility and scope of assistance.

In Rishi Sunak’s endeavour to ensure the Government still carries out its “sacred responsibility to balance the books”, he shouldn’t overlook the part that supporting business will have for the economic recovery. Longer-term viability should not be sweepingly sacrificed at the altar of picking losers in the shorter term.

Alongside grappling with this issue of viability, the Chancellor should set out broad-based measures to give UK plc the shot in the arm it needs – particularly as many SMEs have fallen through the cracks of the initial support schemes. Options for these broadly fall into three categories of focus – protecting and creating jobs, supporting adjustment, and spurring investment. While the Treasury may be mulling tax rises in future, the immediate focus should be on minimising the burden on business for the here and now.

Encouraging firms to retain, (re)train and hire workers in the current climate as the furlough scheme winds down and restrictions continue is undoubtedly a challenge. Of the third of IoD members who still had staff on furlough in September, 60 per cent expected to be able to retain three quarters or more of their workers.

For some businesses, Sunak’s new top-up plans will be enough; but plenty of SMEs at the smaller end will find the price of keeping staff too much. Lowering the adapted Job Support Scheme’s employer contribution for non-worked hours could help in this regard, potentially being funded by removing the job retention bonus (less than one in five directors who had furloughed staff said the bonus would help them retain their employees).

Bold action to help as many firms possible not only hold onto but also create jobs is needed – and cutting the cost of employment is the right place to start. Reducing the burden of Employer NICs, either by boosting the Employment Allowance for smaller firms or lifting the threshold for payments, is one of the top three potential confidence-boosting measures among IoD members.

It is a two-for-one that would both support hiring and provide a one-off cash flow boost to business. Meanwhile, providing new tax incentives to help company investment in training – particularly lifelong learning – would also drive the adult re-skilling needed as firms move towards automation and new digital processes to drive productivity.

Facilitating adjustment will be critical to business confidence as the pandemic evolves – whether that’s returning to normal in a safe way, or exploring a new way of doing things.

Many of our members have said that the reason for their reduced office use was that working from home was proving more effective; expanding the scope of R&D tax credits could be an important tool to help more small firms maximise on the potential productivity gains. Tellingly, investment in digital infrastructure ranked as the top director priority for government to prioritise for spurring an economic recovery.

Lifelines such as government-backed loan schemes and tax deferrals are also crucial measures to extend in helping viable companies continue to weather the storm. Expanding local authorities’ discretionary grant finding will also help for a more appropriately targeted response to help temporarily impacted firms and sectors adjust to localised lockdowns.

And finally, it’s important that measures target the regulatory side too. While the Government has extended some emergency insolvency relief provisions, it needs to do the same for suspension of ‘wrongful trading’ liability to allow firms to seek and access finance during the pandemic.

With new figures out from the IoD showing that the business investment outlook stalled in September after a significant rebound over the summer, it’s vital for the Government to bring forward plans to give industry a boost. In addition to broad-based tax reliefs to harness digital and adaptation technologies, the annual investment allowance cap should be extended beyond 2020.

Additionally, to support growth, a business rates holiday could be introduced on the additional charges firms face when improving or expanding or moving into commercial property. Meanwhile, to turbocharge entrepreneurial growth at a time it is desperately needed, the Treasury should ease restrictions for investing in start-ups and scale-ups by making schemes such as EIS and SEIS more accessible.

Business leaders know that tax incentives at a time of already increased public expenditure to support jobs and enterprise will eventually need to be paid for, but taking action now to stimulate the economic recovery will help lessen and spread the overall burden.

Enabling firms to adjust to a changing landscape of restrictions will help protect jobs, while facilitating business investment will help create new ones. It is this interconnection of priorities the Chancellor must now address and ensure business taxation goes in a productive, efficient direction to support viability, before he can start to focus on balancing the books.