Businesses need more financial support now, not in March Budget, CBI tells Sunak

Lobby group calls for announcement on furlough and business rates holiday extension

Companies need certainty and cannot be expected to wait until the March Budget, the CBI argues (Getty)

The chancellor must act quickly to extend the furlough scheme and announce further support for struggling companies, Britain's largest business lobby group has said.

In a letter to Rishi Sunak, the CBI called for further business rates holidays and a commitment to reform the tax on companies' property, as well as a longer deferral on VAT payments.

Businesses need certainty and cannot be expected to wait until the March budget, the CBI argued.

“Many tough decisions for business owners on jobs, or even whether to carry on, will be made in the next few week," said CBI director-general Tony Danker. “If the government plans to continue its support then I urge them to take action before the Budget which is still more than six weeks away.”

He added: “The rule of thumb must be that business support remains in parallel to restrictions and that those measures do not come to a sudden stop, but tail off over time. Just as the lifting of restrictions will be gradual, so must changes to the government’s sterling support to businesses.”

A business rates holiday for retail, hospitality and leisure businesses is set to end on 1 April. The CBI argues it must be extended for at least three months and that an extension of the furlough scheme, which pays up to 80 per cent of affected staff's wages, is also required.

Many companies have also deferred their VAT bills but face having to pay up soon. The CBI is calling on Mr Sunak to lengthen the repayment period until at least June and allow them to defer their Q1 2021 VAT bills for a year.

The business group also wants to push back the first repayments on so-called bounce-back loans to be pushed back by six months.

Hundreds pf thousands of small firms are due to start repaying the loans from the start of May but many are still operating well below capacity or remain closed completely due to coronavirus restrictions.

CBI chief economist Rain Newton-Smith said: “The government should use the upcoming Budget to speed ahead to low carbon: to accelerate investment in low-carbon infrastructure - through fundamental business rates reform to promote energy efficiency - and the innovative technologies that will smooth the path to achieving net-zero by 2050.

“This budget is 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." 

The Independent has contacted the Treasury for comment.