Chancellor should seek long-term solutions to fire-up business recovery, say MPs
26 February 2021
The Chancellor should use next week’s Budget to address gaps in financial support, affecting the self-employed, mothers who have recently taken maternity leave, and those working in sectors such as the creative industries, say the Business, Energy and Industrial Strategy (BEIS) Committee in an interim pre-budget report on The impact of Coronavirus on businesses and workers, published today.
The report makes a series of recommendations to plug gaps in support, review arbitrary exclusions, and refine the Government’s support so it is targeted at those most in need. The report finds the premature withdrawal of furlough or the Self-Employment Income Support Scheme risks damaging sectors such as the creative industries and hampering the UK’s ability to recover quickly with a focus on good quality work.
The report commends the Government for moving quickly at the start of the pandemic to implement wide-ranging and unprecedented financial support schemes but also finds the Government has not used the opportunity to identify long-term solutions, including on the outstanding issue of commercial rent arrears.
Darren Jones, Chair of the Business, Energy and Industrial Strategy (BEIS) Committee said:
“The Government deserves credit for moving quickly at the start of the pandemic to help protect workers and businesses from the economic fallout caused by the impact of Covid-19.
“However, because of eligibility criteria set by the Government, alarming gaps in support have arisen. These have unfairly affected certain workers and businesses, including women who have recently taken parental leave. Most significantly, this has had the effect of discriminating between self-employed workers and employed workers. These issues have been raised repeatedly with the Government over the past year but are yet to be fixed. In what we will all hope is the last Budget under lockdown, the Chancellor has a final opportunity to get this right.
“This pandemic has highlighted several long-term trends facing the country; with Covid, Brexit and the net zero transition re-shaping the British economy. The Chancellor should come forward with the long-term policies that can meet these challenges. For example, a more comprehensive plan to develop the education, skills and employment opportunities for workers across the country; and targeted support for newly indebted businesses who need to be supported to invest for growth, productivity, job creation and decarbonisation in the decade ahead.”
Support for sectors
The BEIS Committee’s report recommends the Government considers further tailored support for sectors heavily affected by the pandemic and expresses particular concern for 'bricks-and-mortar' retail, unable to compensate for physical closure, and businesses such as those in the 'live events' industry which, though not legally forced to cease operations, have seen a collapse in business due to health restrictions.
The report notes that businesses have taken extraordinary measures to innovate and adjust to the economic restrictions and welcomes the decision by many major supermarkets and other businesses to return financial support they concluded was no longer required. However, the report also expresses disappointment in the behaviour of some corporations who have accessed taxpayer-funded support in bad faith or have treated workers poorly. The Committee reiterates its call for the Government to attach conditions to the use of taxpayer- funded support and recommends the Government reviews what enforcement powers it has to 'claw back' support where appropriate.