Why The Budget Shows Us That Continuing Compensation To Businesses Is Flawed
Remember when you were young and felt unwell, what were you always told? To take your medicine. Well, today's Budget was our interim medicine. Think of it as continued palliative care for all intents and purposes, because the life we once knew is pretty much gone forever. Now, if that sounds all maudlin doom and gloom it isn't meant to be. Far from it. Who knows, our new life could be infinitely better. But for the moment, the patient still requires care and support.
And today's Budget statement from Chancellor Rishi Sunak was a clear indication that whilst this government longs to see the economy back on its feet and smashing trade like never before, it realises that this isn't going to happen any time soon.
Continued furlough until September
Fourth and fifth stage grants for small businesses and freelancers
Business rates holiday extended until June
5% VAT extended until end of September
But someone's got to pay for this:
Income tax thresholds increased however then frozen until 2026
Corporation tax for larger businesses increased to 25%
Taken with the context of Covid, this all says that, despite the vaccine, we should expect to be in a continuing process of gradual easing until at least the end of the year and thereafter, needing to learn to live with viruses of different kinds and mutations.
Don't fall into the trap of thinking that Covid-19 will be the last because odds are that there'll be others.
Extending furlough until September is particularly interesting. It means that by then, millions of people would have been on an extended holiday from work for eighteen months. Like an Olympic sprinter, you don't simply put on your running shoes and fire out of the blocks, you take time to warm up first. And after eighteen months out, those people are going to need a lot of warming up.
And that, of course, assumes that they will have a job to return to. Because the longer they are on furlough, the more chance there is that their job will cease to exist. Which all means the economy is going to need some help to come out of hibernation.
Of course, the two sectors who need support the most at the moment - retail and hospitality - whilst glad of some continuing support in the form of an extended business rates holiday will also be rueing the fact that this is only until June and have not heard anything further about a complete review of the outdated business rates system nor of the much mooted sales tax.
Because it is an inescapable fact that the government is attempting to keep support proportionate with the ability of businesses to trade once more. But this assumes that we will all behave in a certain way once lockdown restrictions are lifted.
And whilst both retail and hospitality have undoubtedly done a lot to try to make their premises safer, in the main, this has all been reactionary - face coverings, sanitiser, screens and in some cases occupancy management.
Which fails to take into account that we have all now become inured to the threat which viruses pose to us and our behaviour and expectations will be altered accordingly.
This is why we at SafePrem are lobbying for government to take a more proactive approach to enabling businesses of all types to get back to trading and operating. Instead of continuing to poorly compensate them, the Treasury should be providing grants to enable businesses to invest in the solutions required in order to properly make their premises as safe as they can possibly be.
At SafePrem, we have made it our mission to support retail and hospitality initially but it may well be that when offices begin to get populated once more, in other words, those premises without customers, but plenty of staff, that we will see calls from unions to employers to do more to ensure the safety of their members.
After all, if we are to have a sustainable future, in all senses of the word, we'll soon tire of hand sanitiser and perspex screens.
Andrew Busby is co-founder of SafePrem Solutions