Sunak to extend support – business news 1 March 2021.

James Salmon, Operations Director.

Sunak set to extend support; Insolvency service pays out most in a decade; Government borrowing costs rise as inflation fears grow; Economic growth to miss predictions, budget predictions and lots more business news from the weekend.

Sunak set to extend support

Chancellor Rishi Sunak has indicated that his Budget will see a range of emergency coronavirus support measures extended, with the furlough scheme, bounceback loans, targeted VAT cuts and stamp duty reductions set to remain in place until June. Speaking ahead of his upcoming Budget, Mr Sunak said: “We went big, we went early and there’s more to come next week”. He suggested that support would be extended in line with the roadmap out of coronavirus restrictions set out by the Prime Minister, saying: “I want to support people and businesses along that path.” Mr Sunak told the BBC’s Andrew Marr that while the Budget will seek to provide support, he wants to “level with people” about the “shock to the economy” caused by pandemic, adding that he wants to “be honest” with the public about the pandemic’s impact on the economy and “clear about what our plan to address that is”. The Chancellor said making public finances sustainable “isn’t going to happen overnight”, warning that debt could “rise indefinitely” if borrowing continued after the recovery.

Insolvency Service pays £453.4m in missing wages and benefits

Figures show that the Insolvency Service paid out £453.4m in missing wages and benefits to workers at firms that went bust last year, the highest total in a decade. The data, compiled by real estate adviser Altus Group, shows that payouts included £297.5m in redundancy pay. The analysis also shows that Government support rolled out amid the pandemic meant the number of firms going insolvent fell 27% compared to 2019. Calling for further support, Altus Group has urged the Chancellor to extend the business rates holiday.

Government borrowing costs rise as inflation fears grow

Yields on US and UK government bonds rose yesterday hitting one year highs and driving further the worldwide equities sell-off. The FTSE 100 dropped 2.5% while the Cac 40 and the Dax were also off by 1.5% and 0.8% respectively as concerns about inflation grow. “In the short term, volatility is likely to persist, and yields may rise further still,” said Salman Ahmed, global chief investment officer at Fidelity International. “However, while further rises in real rates and tightening of financial conditions may be needed before any real action is taken by central banks, we are closer to a turning point than a week ago.”

Economic growth to miss predictions

Britain’s GDP is expected to fall 4% in the first quarter of the year according to the EY Item Club, a downgrade on the 1.9% Q1 growth predicted by the Office for Budget Responsibility (OBR) in November. EY expects the OBR to revise down its forecasts after non-essential high street retail and hospitality were closed amid the latest nationwide restrictions in January. While the coronavirus vaccine rollout is expected to boost growth in the second half of 2021, EY expects overall growth for the year to be down on earlier predictions, forecasting 5% growth against official predictions of 5.5%.

30 pubs and restaurants close a day while distillery numbers jump

Research from CGA shows that an average of 30 pubs and restaurants a day have closed in the past 15 months. The report shows that 4,170 new sites have been recorded since December 2019 but the loss of 11,894 venues means three closures for every opening, with a net loss of 7,724 licensed premises. Meanwhile, the number of distillery businesses has risen by nearly a third amid the pandemic, with UHY Hacker Young saying the total jumped from 272 in 2019 to 351 last year, with this likely to have been fuelled by people using the lockdown to start craft spirits businesses.

Sunak to announce £126m boost for traineeships

The Chancellor is set to funnel a further £126m into training and apprenticeship schemes in his Budget on Wednesday. Rishi Sunak said it was “vital” support continued to get people back into work. Currently, firms in England are given £2,000 for every new apprentice they take on under the age of 25, and £1,500 for those over 25, in addition to a £1,000 grant they are already getting under another project. The Government’s planned investment could therefore enable a further 40,000 traineeships.

Jobless rate around airports above average

Parliamentary data shows that unemployment rates are higher around major airports. While the number of people claiming unemployment benefits went up 112% across the UK between January 2020 and January 2021, in areas around the UK’s top 20 airports it rose 145% on average. In the constituency which contains Heathrow the number of people claiming unemployment benefits has increased 221%, while around Gatwick it has increased 224% and near Stansted the rate has increased by 228%. The All Party-Parliamentary Group for the Future of Aviation said the data shows that airport communities are being hit hard by the pandemic and is calling for more support for the industry.

Sunak to pledge £5bn in grants for the high street

In his Budget on Wednesday, the Chancellor will announce a £5bn fund to help high street pubs, restaurants and non-essential shops that have remained closed as a result of the Covid lockdown. Nearly 700,000 companies will be eligible for new direct cash grants of up to £18,000. Rishi Sunak said on Saturday night: “Our local businesses have been hit hard by the pandemic, which is why we went big and went early with a multi-billion pound package of support. There’s now light at the end of the tunnel, and this £5bn of extra cash grants will ensure our high streets can open their doors with optimism.” Craig Beaumont, chief of external affairs at the Federation of Small Businesses, heralded the “significant cash injection”, which he said would “help thousands of businesses survive through these final restrictions, and then help drive the vaccine-enabled recovery”.

Boris Johnson: Remote working won’t be the new normal

The Prime Minister has said in only a few months people will be commuting back into the cities and returning to their offices to work. Boris Johnson dismissed fears that Britain is facing a new age of remote working claiming in a video message that, as the economy reopens, “the British people will be consumed once again with their desire for the genuine face-to-face meeting.” The PM’s comments come after Goldman Sachs boss David Soloman rejected remote working as the new normal and labelled it an “aberration”.

Businesses draw up plans for hybrid working

With many firms launching reviews of working practices, preliminary findings from a poll of PwC staff show many favour working three or four days in the office.

Hospitality sector calls for further support

Hospitality firms have warned that one in five businesses in the sector could run out of cash in the next week unless more emergency support is confirmed. In a letter to the Government, signed by companies including Carlsberg, Intercontinental Hotels, pub chain Wetherspoons and Legoland owner Merlin Entertainment, they warned they faced a “truly perilous” situation with months of continued restrictions ahead. The letter said: “There is a significant gap between the current support provided by the government and the fixed outgoings associated with a closed hospitality business.”

UK urged to create a fintech taskforce

Ron Kalifa is urging the Government to establish a high-profile taskforce to lead innovation in financial technology as part of the UK’s growth plans after Brexit. Mr Kalifa, the former boss of the payments processor Worldpay, was asked by the Treasury to review the sector in July. The Chancellor said yesterday that the review “will make an important contribution to our plan to retain the UK’s fintech crown, create more skilled jobs and deliver better financial services for people and businesses.” Rachel Kent, a partner at Hogan Lovells Financial, who led some of the work for the report, said: “While the UK’s position is well established its future is not assured. Being outside the EU has created an opportunity to re-examine and reshape our regulatory framework to ensure it remains attractive and enabling to fintechs.”

UK Government to take stakes in tech start-ups

The Chancellor is preparing to launch a £375m fund to invest in fast growing UK tech companies as part of a series of policies focusing on the sector.

Sunak warns of bill to be paid to tackle UK’s ‘exposed’ finances

The Chancellor has said Britain’s finances are “exposed” to rising interest rates and the public need to be told the truth about the challenges facing the country. Meanwhile, a Treasury decision to hold a “tax day” three weeks after the Budget will be a bellwether for long-term changes in government policy, experts have said. Separately, Conservative party doners have warned Rishi Sunak that raising taxes in his Budget would be “utterly wrong” and risk sending Britain into another recession. Property developer Steve Morgan said: “One of the advantages of leaving the EU is that we can become a low-tax, dynamic society which can become Europe’s go-to country for investment. Increasing corporation tax and CGT flies in the face of this.” Banker Sir Henry Angest was particularly blunt, adding: “I suspect there is a mindset at the Treasury that just doesn’t believe in the c apitalist economic model.”

Chancellor denies tax claim

Rishi Sunak has dismissed claims that he has privately told MPs he wants to raise taxes now so he can cut them before the next election, telling the BBC’s Andrew Marr: “I don’t recognise that”. Speaking ahead of the Budget on Wednesday, Mr Sunak would not confirm newspaper reports he is planning to freeze income tax thresholds or raise corporation tax in a bid to lower debt. The Telegraph reports that the Chancellor is considering freezing the point at which people start paying the basic rate of income tax and the threshold at which they begin paying the higher rate for at least three years, while corporation tax could rise from 19% to at least 22%. Speaking to Sky News’ Sophy Ridge on Sunday, the Chancellor said he “would like to be able to keep taxes low for people in general” but added that he wanted to “be responsible” with people’s money. BBC News notes that the former chancellor Lord C larke believes Mr Sunak should consider raising VAT, national insurance and income taxes, while Martin Beck, senior economic adviser to the EY ITEM Club, has suggested repairing the public finances could wait and warned that “premature fiscal tightening could undermine recovery”. Writing in City AM, BDO’s Paul Falvey says Mr Sunak faces a “big challenge” to increase the tax take and support the individuals and businesses most severely impacted by COVID-19. Meanwhile, the Mail says the Chancellor could wait until his autumn Budget to deliver tax increases that may include increases to capital gains tax and national insurance for the self-employed, as well as cuts to pension tax relief. Elsewhere, Shadow Chancellor Anneliese Dodds has suggested she would like to see corporation tax raised, saying the UK needs to get “to a better place” on the levy.

MPs: Now is not the time for tax rises

A Treasury Committee report says now is “not the time for tax rises”, warning increases may be needed in the future but in the current climate they could undermine the economic recovery. The cross-party group of MPs says public finances are on an “unsustainable long-term trajectory” and suggests the Government’s “tax lock” manifesto promise not to increase the rate of income tax, VAT or national insurance will come under pressure. The report suggests a “moderate increase” to the corporation tax rate could “raise revenue without damaging growth, especially if balanced with fiscally appropriate measures for business”, while stamp duty is “economically inefficient” and suggests a review of the tax treatment of the self-employed “long overdue”. The MPs have also suggested that businesses should be allowed to offset pandemic losses with a corporation tax refund. Mel Stride, chair of the committee, said: “With our public finances on an unsu stainable long-term trajectory, our clear message is that Budget 2021 is not the time for tax rises or fiscal consolidation.”

Tories to blame for 1,000 tax rises in the last ten years

Research by the TaxPayers’ Alliance shows Conservative prime ministers have pushed through more than 1,034 tax rises over the past decade. A total of 1,651 tax changes were made since 2010 with VAT, vehicle excise duty and Income Tax seeing the most adjustment. Income Tax was changed 180 times, going up 61 times while cuts were made 119 times. The Alliance is calling for a recovery budget on Wednesday, giving taxpayers a respite from rises. John O’Connell, chief executive of the Alliance, said: “The tax burden is at a 70-year high, and it’s not hard to see why after a decade of tax increases. All too often we’ve seen Conservative chancellors give with one hand but take back a good deal more with the other, meaning every aspect of every-day life comes with a sizeable tax bill.” Meanwhile, former Tory Chancellor Lord Ken Clark has said Rishi Sunak should not be afraid to raise income tax, VAT or national insurance be cause people would understand that when the Tory manifesto was written the pandemic could not have been predicted.

US removes stumbling block to global deal on digital tax

Janet Yellen, the US Treasury secretary, has told G20 finance ministers the US will remove the “safe harbour” requirement from proposals for global digital taxation reforms, potentially unlocking long-stalled multilateral negotiations at the OECD. The measure, which Donald Trump’s administration insisted on in 2019, would permit US tech companies to opt out of having to pay such taxes abroad. The German finance minister Olaf Scholz said Ms Yellen’s statement was a major breakthrough.

UK carmakers may need state aid to survive

The Sunday Telegraph reports on the challenges ahead for Britain’s automotive sector, with Covid and Brexit stunting production to 1984 levels the industry faces tough decisions regarding the investments required for the transition to electric vehicles. Andrew Burn, head of automotive at KPMG says CEOs of carmakers are likely to put off investments in the near term, adding: “Manufacturing in the UK is down to government’s appetite for it. Does it support it or not?”


The UK and EU are nearing agreement on a joint forum for discussing regulations and information sharing though this is not yet at the stage of negotiations on equivalence. Since Brexit took effect on 1st January 2021, UK financial companies have been unable to operate in the EU from London


Amanda Staveley has lost her court battle against Barclays with the judge finding that she was not in a position to complete the fund raising deal that she proposed and hence suffered no financial loss. Staveley had demanded £600m in damages

British Airways

British Airways owner IAG has called for digital health passes “to reopen our skies safely” as it posted a record loss for 2020 due to Covid-19. The airline group, which also owns Iberia, Aer Lingus & Vueling, called for “a clear road-map for unwinding current restrictions when the time is right.” “We’re calling for international common testing standards and the introduction of digital health passes to reopen our skies safely,” said boss Luis Gallego.


Bunzl reported a rise in profit on an uptick in profit and margin amid increased sales of higher priced Covid-19 related products. For the year ended 31 Dec 2020, pre-tax profit rose 22.6% to £555.7 million year-on-year as revenue increased 8.4% to £10.11 billion.

Why should you become a CPA member!

The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for some time to come.

CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers.

Unlike other credit management companies, we charge our members a fixed annual subscription irrespective of how high the debt value is!

It takes less than 17 minutes to see how you would benefit, do you have the time now?

No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email today.

When you see your money come in, you will be so glad you used CPA.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

Get compensated for previous late payments

Have you been paid late by business customers in the last six years?

Maybe you no longer work with them. Under legislation, you are entitled to  compensation you for those late payments you have suffered.

You put up with the PAIN – now claim the GAIN!

Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!

CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients

Check our compensation calculator to see how much your business could be owed!

Discover NOW the potential value of late payment compensation hidden in your sales ledger!

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.