CBI @10am: How to manage your cashflow and plan ahead

Speakers:

• John Foster, Director, Policy and Communications, CBI
• Louise Hellem, Director, Economic Policy, CBI
• Dame Teresa Graham DBE, Chair, UK Finance Group SME Advisory Group
• Marc Gill, Director, Debt Management, HMRC
• James Harding, Co-founder and Editor, Tortoise Media (chair)

In this session:

John Foster:

• There was been a dialling up of optimism from the Govt on re-opening. What’s changed? Javid giving greater weight to economic implications of restrictions and has increased rhetoric around 'living with the virus'. Looks like link between infections and hospitalisations and deaths has been broken, too.
• But what does this optimism mean for firms? Key outstanding questions are:
  • What will be the social distancing measures beyond 19 July (removed?)
  • What is the current status regarding of covid status certificates (open possibility they might be used in winter)?
  • How is covid secure workplace guidance going to evolve?
• We are expecting the mandate for working from home to be dropped, but what they won't do is order to campaign for people to get back to the office
• PM due to give press conference today: expecting Step 4 to be formally announced on 12 July, but providing extra week for prep prior to that move.
• CBI messages to Gov't: positive that govt has listened to us and giving some extra time to plan for firms, and we think learning to live with the virus is the right move.
• Key focus now needs to be on enablers such as schools and transport, test and release schemes established, and how we will monitor impact of the virus on our healthcare systems going forward - what's going to happen in the winter?

Dame Teresa Graham DBE:

• General view is that it's a mixed picture across the economy and within sectors – some clear winners and others really struggling. However we are not seeing a significant number of companies in distress of level of insolvencies – they are well below normal levels.
• Business have been taking a cautious approach and some are getting back on their feet, but we don’t know yet what the impact will be from gov’t support cliff edges, potential redundancies in pipeline, number of zombie companies and how many companies will survive.
• What’s important is that businesses start planning now and speak to their lenders particularly if they want to take up forbearance options. If you think you might have a cashflow problem - you should speak up and seek advice from accountants, banks and trade associations.
• Insolvencies are likely well below normal levels because of Government support. Teresa stated that we will see redundancies when the furlough scheme ends which has potentially been masked by furlough. In addition, rent arrears is also a real cliff-edge.
• On optimistic note, last quarter saw highest level of business start-ups from any previous quarter - almost 200,000 businesses.

Marc Gill:

• Marc leads debt management service – made clear that they want businesses and individuals to come forward and speak to HMRC about their situation. Want to maintain supportive and flexible approach to payment plans based on business cashflow – nothing fixed or arbitrary.
• Have set up about 500,000 ‘Time to Pay’ arrangements (payment plans) throughout the course of the pandemic – enormous scale. If businesses get in touch they'll get in touch with one of our advisers, and we will be flexible in offering support - but important that businesses get in touch in first instance.
• We're also really clear about what's required, and if a businesses can play more they can do so, and if they're struggling we can talk through the situation.
• On potential instances of fraud from bounce back loans and other schemes: again taking a very understanding approach to circumstances. While there are some instances of fraud, sometimes it’s just that businesses have had administrative difficulties and have made genuine human errors e.g., businesses claiming CJRS but not paying PAYE and NICs. Making sure they do pay it back but in an arranged way and taking into account there may be innocent errors.

Louise Hellem:

• Fortunes for businesses have been really tied to the virus and a two-speed economy has emerged across the private sector.
• Have seen this in recent CBI survey data e.g., manufacturing and distribution sectors have grown rapidly and at record rates, but consumer sector still struggling alongside international travel.
• When it comes to support cliff-edges, some deadlines have been shifting along with the revised roadmap:
  • We’ve seen an extension of the commercial rent moratorium until March 2022
  • Trade credit guarantee scheme has now ended.
  • Furlough is still available in September but employer contributions for CJRS have now increased.
  • On business rates relief - no extension yet and we’re still waiting on guidance for business rates relief fund in coming weeks.
  • Some loans/deferred tax re-payments are starting now so we may see these start to bite once furlough scheme ends in September alongside VAT rises.