Comment

Five business tests that must be met to limit the impact on firms and jobs

Support is welcome but no amount of state aid can compensate for an open, fully functioning economy

The Chancellor has taken significant steps to bring Government support back into line with the impact that increasingly severe restrictions are having on business communities.

The Job Support Scheme, originally designed for a reopening economy, will now support many more businesses that are seeing a substantial fall in demand as a result of new or ongoing restrictions. The newly enhanced scheme will likely save many jobs.

Chambers of Commerce have called for support to be truly commensurate with the restrictions imposed on them as part of our five tests for coronavirus measures. Rishi Sunak responded to our calls by lowering employer contributions and the number of hours worked needed to qualify for the Job Support Scheme.

Backdated grants for hospitality firms in Tier 2 and enhanced grants for the self-employed will go some way to relieving the pressure on those who have been particularly vulnerable to the economic impact of the pandemic.

And yet, no amount of financial support can compensate for an open, fully functioning economy. The UK needs a strategy that allows us to avoid economic paralysis and protect public health over the longer term.

Since July, businesses throughout the country have worked incredibly hard to implement Government guidance and create a Covid-secure environment for their employees, visitors and customers. The need for additional restrictions cannot be blamed on a lack of care by dedicated employees in businesses across the country. Instead, it demonstrates the failures of short-term decision making and of Test and Trace systems, which must be improved and expanded.

Last week, the British Chambers of Commerce challenged the Prime Minister to meet five business tests that must be met to limit the impact of new restrictions on businesses and jobs, and to take a long-term approach to tackling the virus. Failure to meet these tests now will put the future of the economy and the country at risk. They are as follows: 

  • First, are the restrictions evidence-based and targeted effectively?
  • Second, are the restrictions clear and do businesses have time to prepare?
  • Third, is support for businesses commensurate with the impact on them?
  • Fourth, will the time that the restrictions are in place be used to significantly improve the Test, Trace and Isolate system?
  • And finally, is there a clear process for increasing and decreasing restrictions?

Yesterday’s announcement from the Chancellor goes some way to meeting test three. Yet the true test of these reforms will be whether they help businesses get through the difficult months ahead. Chambers of Commerce will continue to work with the Treasury to ensure that support is responsive and preserves businesses and livelihoods.

Over the critical weeks ahead, each one of the five tests must be met, across every region and nation, to avoid serious damage to business and consumer confidence, and potentially catastrophic economic consequences. We must preserve our economy in the immediacy, while also laying the foundations for future growth. Supporting viable businesses now is fundamental to any efforts to “level up” left-behind parts of the UK.

The coronavirus is not going away anytime soon. The Government must waste no more time in setting out a clear strategy to keep the economy functioning, while protecting public health over the long-term.

Hannah Essex is co-executive director at the British Chambers of Commerce