The Institute of Directors is calling on
the Government to use
its upcoming Economic Statement to ‘pump-prime’ the
economy and support employment.
In a submission to the Treasury,
the IoD warned of potential job losses
as the furlough scheme winds down, and urged the
Government to act now to reduce the cost of employing
people, for example by increasing the Employment
Allowance and raising the threshold for Employers’
NICs.
According to new figures released by the Institute, in a
survey of over 700 company directors following the publication of
government guidance, a quarter said their firm would be operating
at less than half capacity under social
distancing. The IoD’s latest Confidence
Tracker showed that directors’ hiring and
investment intentions for the year ahead have hit
new record lows.
The business leaders’ group is also pressing for
measures to support business investment. Recommended policies
included widening the scope of tax
breaks for research and development activity,
something proposed in the 2019 Conservative
Manifesto, to support firms in
making digital and other productivity-enhancing
investment.
Jonathan Geldart, Director General of the Institute
of Directors, said:
"The July statement provides a perfect opportunity to
pump-prime the economy for recovery.
"The Government may want to hold back some ammunition until
the Autumn, but directors have to make hiring and investment
plans ahead of time. Now is the moment for the Treasury to reduce
the cost of employment so companies can retain staff. As the
furlough scheme winds down, jobs are at risk, so it will be
crucial to soften the blow.
“Businesses will face another cash crunch as they try to
adjust and reopen, and many expect that social distancing will
mean lower revenues for some time. With lots of debt sloshing
around the system, investment will be suppressed, and this will
hold back our recovery for the medium term. The quicker we start
to deal with that challenge, the quicker our recovery can
be.”
Key policies from the IoD's submission include:
· Business
investment
incentives: Widen the
scope of
R&D tax reliefs to support investment in
technology, training, and in adapting their business
models
· Reducing
employment costs: Raising
the Employment Allowance and more broadly thresholds
for Employers NICs, would support retention and hiring during the
recovery.
· A
‘Recovery Grant’
scheme: The Discretionary Grant
fund should be increased and expanded to extend grants to
businesses that have not yet received support during the crisis,
need to cover ongoing costs, or require costly workplace
adjustments for social distancing.
· Support
scale- and start-up investment: The
Enterprise Investment Scheme and Seed Enterprise Investment
Scheme reliefs should be made more generous, accessible, and
simple.
· Easing
the burden of business debt: Forthcoming
debt interest payments will restrain firms' recovery and
investment prospects. Government should consult on restructuring
loans so firms can return to growth and make
repayments.
