Chancellor should “carefully consider” targeted financial support extensions in sectors that need it
The Chancellor should “carefully consider” targeted extensions to Job Retention Scheme, according to a new report published by the Treasury Committee.
The Committee’s latest report entitled the ‘Challenges of Recovery’, focuses on the medium-term challenges that have emerged as the economy comes out of lockdown. This includes supporting the recovery of consumer spending, minimising long-term unemployment increases, and dealing with elevated levels of corporate debt. It also examines longer-term issues, such as government debt sustainability.
Many industries are yet to adequately recover from the financial impacts caused by COVID-19. This has cited calls for more to be done to assist small businesses and industries likely to survive after the pandemic.
Some industries like the tourism and leisure sector has made little to no progress in terms of recovery. This is despite proving to have a good viable long-term business model.
The taxi industry also continues to struggle with unsustainable work levels and high operating costs moving forwards. This has been due to a decrease in footfall, lack of night-time economy and fewer tourism opportunities.
The Committee has made a series of recommendations to the Government. One of the key recommendations includes an effective targeted assistance program providing support to those who need it. Rather than a blanket workers' scheme that has so far cost the treasury £56billion, the committee has urged the chancellor to target those sectors still effected financially.
In the report the committee suggests that the Chancellor should ‘carefully consider whether a targeted extension of the Coronavirus Job Retention Scheme (CJRS) and/or other targeted support measures might be required and explain his conclusions’.
There were also calls for the Chancellor, Rishi Sunak, to detail how small to medium sized businesses, who took out bounce back loans to stay afloat, should pay back the loans moving forwards. In the report it states ‘The Committee is concerned that there may be a significant lack of capacity and willingness for the private sector to step in to provide solutions for corporate indebtedness, especially amongst SMEs. Viable SMEs struggling with debt will prolong the recession, and so the Government must develop solutions for ensuring the recapitalising of their balance sheets. The Government must outline a plan for this within the next three months and should think creatively about potential interventions’.
There were also calls for similar schemes to that of the popular ‘Eat Out to Help Out’ scheme, which encouraged people to spend money and an extension to the raised Universal Credit payments.
This latest report follows a first report called Gaps in Support. The Committee expressed their disappointment that the Government did not implement its recommendations to help the million-plus people that are still affected by the significant gaps in the Government’s support schemes.
Rt Hon. Mel Stride MP, Chair of the Treasury Committee, said: “The Committee’s disappointment that the Government did not implement our recommendations to help those who have fallen through the gaps in support persists. Our second report of the inquiry focuses on emerging challenges as lockdown measures are lifted.
“One such challenge is to target assistance effectively at those businesses and individuals who need it. The Chancellor should carefully consider targeted extensions to the Coronavirus Job Retention Scheme and explain his conclusions.
“The key will be assisting those businesses who, with additional support, can come through the crisis as sustainable enterprises, rather than focusing on those that will unfortunately just not be viable in the changed post-crisis economy.
“This requires a very difficult set of judgements; it is where careful analysis and creative thinking will be critical.
“As the Committee has said throughout the crisis, the Chancellor must continue to show flexibility in his approach. We hope that the Treasury’s unwillingness to implement the recommendations from our first report is not a sign of how it will respond to this one."
Last week it emerged that taxi industry representatives have contacted the Chancellor to seek “answers and reassurance” in regards to what financial support will come next.
Steve McNamara, LTDA General Secretary, wrote in the latest edition of TAXI: “I wrote to the Chancellor again last week to make sure he understands the need for ongoing support for the taxi trade beyond October, with trade likely to be slow to pick up.
“I also repeated calls for him to look again at the self-employment furlough scheme and ensure that people who have been unable to claim can access much needed financial support.
“I will be following up with officials in the Treasury, who we worked with previously, to try and get some answers and reassurance on what comes next.”