Emergency budget needed to help businesses meet rising costs

Business leaders in Coventry and Warwickshire have backed national calls for emergency measures to support firms with rising costs.

The British Chambers of Commerce (BCC) is calling for an emergency budget to deal with the costs crises facing businesses and people throughout the country. That is being supported on a regional by the Coventry and Warwickshire Chamber of Commerce.

The BCC has developed a three-point action plan that would allow firms to keep a lid on rising prices, boost productivity and ease cost pressures.

The proposals include:

- Ease upfront costs of doing business by reversing the recently introduced National Insurance increase until at least 2023/24.

- Help firms manage the impact of rising energy prices by cutting VAT on their energy bills from 20 per cent to five per cent for a minimum of one year.

- Address labour shortages by reinstating free Covid tests for companies to ease the strain on productivity caused by persistent high absences.

Together the three steps would take the pressure off businesses that are battling to keep the economy afloat and offer a route to higher productivity and tax receipts in the future.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said: “At the height of the Covid-19 crisis, the Government offered unprecedented support to businesses on a scale never seen before.

“Nobody in business is expecting or calling for that level of help again but with rising costs impacting on just about every company across the patch and, indeed, the country, colleagues at the British Chambers of Commerce are rightly looking to the Chancellor to introduce measures to ease those burdens. We are in regular contact with our members and costs are being raised by them time and again as a real barrier to growth and, therefore, urgent action is needed.”

The measures in more detail:

1. Postponing the rise in National Insurance Contributions would not only ease the immediate pressure on companies’ balance sheets but it would also put money back into the pockets of people – boosting consumer confidence. When supply chain disruption has unwound and global factors influencing inflation have receded the economy will then be in a much stronger position to bear the increase.

2. Cutting VAT on business energy bills to 5%, for all businesses, would provide another quick release valve on soaring costs for firms. For example: a small business which has an energy bill of £10,000 and currently pays the standard 20% rate would pay £2,000 VAT. Our proposal would see that cut to £500. This measure could be adjusted over time to take account of those sectors most in need.

3. Many businesses in the UK are still seeing above average absence rates as Covid continues to impact the workforce. Around two thirds of more than 1,100 firms surveyed in April by the BCC reported staff absences due to Covid symptoms or self-isolation. Bringing back free testing would allow firms to limit the disease’s spread among employees. With wider structural staff shortages continuing to limit productivity this would be a key measure to keep the economic recovery on track.