Business lobby urges UK government to extend support scheme

The new head of a leading UK business organisation has called on the government to provide further help for companies through the extended lockdown announced this week.

Shevaun Haviland, director-general of the British Chambers of Commerce since March, said the decision to withdraw support for furlough payments and business rates after the government delayed the final stage of economic reopening was “disappointing”.

“It seems logical to us that if you are extending the road map then you need to extend the support to go with it,” she said, adding that this should include cash grants and a delay to the tapering of furlough cash.

The risk of a marked rise in insolvencies and redundancies as government support winds down remained high, said Haviland, as rates and wage costs starting from July kick in for many companies. “Every day that’s cash leaving businesses that can’t afford it,” she said.

Haviland joined the BCC from the Cabinet Office, where she ran the business partnerships team. She said the Chamber would be a “critical friend” to the government, offering ministers access to its 53 local chambers around the country as well as its international offices. 

But she said there needed to be a greater effort to engage smaller businesses in areas such as meeting “net-zero” climate targets, given that many lacked the financial resources after building up debt during the pandemic. 

She also advised the government to consider drawing up an overarching plan for business in the UK to replace the axed industrial strategy.

This could bring together policies around skills, net zero and trade, she said, pointing to questions over the future success of local elements of the industrial strategy.

“We would definitely like an overall business strategy,” she said. 

Kwasi Kwarteng, business secretary, has focused on three areas — innovation, enterprise and net zero — since taking over at the start of the year. But he has faced criticism that these lack clear plans of action for the government or businesses that can be assessed independently.

The “levelling-up agenda” to reduce inequalities between different parts of the UK — another key government policy — also needed clearer definition for companies, she said: “I would not say it’s taken root. People are still questioning what it is. [Businesses] want to know what it means.”

“[Brexit] has not gone away,” said Haviland, adding that many BCC members were still struggling to manage the red tape and the cost of new rules around trade after the UK left the EU at the start of the year.

Haviland said that there were continued questions from businesses over the incoming trading rules and concerns over changes that still needed to happen, such as the replacement of EU “CE” product labelling to the UK Conformity Assessed marking at the end of the year. 

The BCC wants the government to review new processes resulting from the EU-UK trade and co-operation agreement, as well as work with Europe to simplify and streamline rules to reduce the burden of paperwork and prevent delays.

This should focus initially on areas where businesses have the greatest difficulty, according to the BCC, such as VAT and rules of origin, given “existential challenges” to firms’ ability to trade with the EU.

Haviland will make her first speech at the BCC’s annual conference on Thursday, arguing that the government needs to take extra steps to boost UK trade, tackle the blockages in the skills training system and build a greener economy.

A report to be published on the same day will make a series of recommendations to help rebuild the UK economy and support businesses to recover after the pandemic.

These include requiring lenders to accept requests from companies that have borrowed money under the coronavirus business interruption loan schemes, to extend the term of loans up to 10 years; and offering a “student-loan”-like repayment schedule to pay back debt only after the company have reached profitability.

The BCC will also suggest expanding the “super-deduction” tax break scheme to a wider range of firms, and doubling investment in start-up loans from £250m to £500m.

Haviland said the recommendations would help put in place a “strong scaffolding” to allow businesses “to really focus on growth as they come out of the back end of this year”.