Just before Christmas, the Chancellor announced that the Spring Budget would take place on 3 March. This budget comes at the start of a defining year for the UK - as businesses continue to battle the pandemic whilst the country looks towards hosting the G7, COP-26 and creating a greener, more dynamic and competitive UK.
This week, the CBI submitted key business priorities to shape the first fiscal event of the year and ensure that the UK both addresses the challenges and seizes the opportunities of 2021.
What the CBI called for
1. Continue to manage the COVID-19 economic crisis ahead of Budget to help businesses survive until the economy reopens later this year
The Treasury has acted swiftly to provide a lifeline for the economy, businesses, and people’s livelihoods. But the economic reality facing firms now is extremely challenging. After almost a year battling the pandemic, we know that business resilience is at an all-time low. Intermittent demand has put pressure on cashflow, firms are highly leveraged and reaching borrowing limits on loans, staff absences and low morale are affecting business operations, and firms are now looking at a spring cliff-edge in COVID-19 financial support. Learning from the experience of last summer, the government must avoid ending support measures in a cliff-edge that is not in-step with a phased reopening of the economy and the gradual return of demand.
We’ve called on government to:
- Extend the Job Retention Scheme to the end of June and commit to targeted support thereafter to give firms the certainty they need to protect jobs
- Lengthen repayment periods for existing VAT deferrals until June 2021 at the earliest and allow firms to defer Q1 2021 VAT bills due now for twelve months
- Extend the business rates holiday for at least another three months to those UK firms forced to close under current restrictions and expand relief to their supply chains
- Deliver the Pay As You Grow scheme for Bounce Back Loans, including extending capital and interest payment holidays for a further six months
- Work with Local Authorities to ensure existing discretionary grants are in business’ bank accounts by the end of February 2021.
2. Stimulate business investment to put the UK back on the path to prosperity
This Budget is also an opportunity to focus on a balanced economic recovery not driven solely by consumption and government spending, stimulating much-needed business investment and tackling the systemic challenges that have held the UK back.
We’ve therefore called on government to:
- Use the net-zero transition to drive the UK's economic recovery: driving the shift to zero emission vehicles by committing to the delivery of 7 more gigafactories by 2040; reviewing fuel duty taxation; and ensuring the new National Infrastructure Bank crowds-in private sector investment and investing in sustainable aviation fuels.
- Deliver comprehensive reform of the business rates system: to support our struggling high-streets, drive essential investment in energy efficiency and level-up business investment across the UK. For example by freezing the Universal Business Rate (UBR) for the remainder of the current revaluation period and lowering it at future revaluations to a more sustainable level; and introducing a new relief for businesses that invest in the energy efficiency of their property and upgrading their fixed machinery to improve productivity and energy efficiency.
- Turbo-charge innovation spending by government and business: by introducing a new R&D tax credit for capital expenditure and reducing match funding requirements for R&D grant funding to spur business innovation; and delivering an ‘Invest to Grow’ scheme to spur SME spending on productivity enhancing digital technologies.
- Incentivise greater business investment in retraining and upskilling: by evolving the Apprenticeship Levy into a flexible Skills and Training Levy to unlock business investment in high-quality accredited training; and transforming Jobs Centres into ‘Jobs and Skills Hubs’ to help people to retrain.
Over the coming weeks, the CBI will continue to feed in key recommendations to HM Treasury for action both ahead of and at Budget.
We’ll also monitor government announcements during the Spring Budget on 3 March and will provide members with exclusive key insights on the day, on MyCBI.