Lucy Powell has called on the government to act now to support businesses as they face what she described as “one big bombshell” in April as tax deferral costs and VAT cuts coincide with the end of various support packages.
Discussing the challenge facing firms, the shadow business minister urged the government to extend the business rates holiday, maintain the reduced rate of VAT for those in the hospitality sector and extend the furlough scheme.
In an interview with BBC Breakfast this morning, Powell told viewers: “We really have to deal with this issue now, that all of the economic support packages are coming to an end in one big bombshell, really, at the beginning of April.
“And businesses are today having to plan how are they going to start paying back those VAT deferrals, how are they going to start paying business rates again.
“In fact, bills are going out for business rates around now from councils and will they be able to deal with a 20% VAT if they’re in hospitality, for example.
“So, we want the government to extend business rate holidays for at least six months to carry on with the cuts in VAT for hospitality and extend the furlough scheme for as long as public health restrictions are in place.”
“All the economic support packages are coming to an end in one big bombshell”⁰
— BBC Breakfast (@BBCBreakfast) February 9, 2021
Labour has warned that businesses face £50bn in costs in April with a number of support measures coming to an end at the same time as payments become due on exemptions given over the past year to help businesses cope with the pandemic.
Based on recent Office for National Statistics survey data on the impact of the the virus on businesses, an estimated one million food and accommodation services businesses have reported having less cash reserves of less than three months.
53% of respondents in the sector reported that they had less than three months’ cash reserves. Replicating the numbers from the survey on a national basis suggests that this is the case for 1,047,280 businesses in the industry.
The comments from the shadow business minister this morning follow the opposition’s demand last week for a “smart” furlough scheme extension to protect jobs as long as coronavirus restrictions remain in place