CBI outlines steps to keep firms afloat
● Organisation’s proposals include 3-month business rates suspension
The CBI has outlined a raft of measures aimed at accelerating emergency support to distressed firms amid the continuing Covid-19 crisis – adding that it is a “race against time” to get help “where it’s needed most”.
It came as the CBI’S latest industrial trends survey showed manufacturers are taking a “sharp hit” because of the economic shutdown, with a huge fall in output and investment plans put on ice.
The organisation said the UK Government has acted at pace to protect firms and jobs, with around £6 billion in grants from local authorities having reached small businesses. It also noted that the Job Retention Scheme started “strongly” on Monday, protecting nearly three million jobs.
But it said fresh weekly Coronavirus Business Interruption Loan Scheme (CBILS) data, which shows more than £2.8bn of lending provided to 16,000 firms so far, “highlights the need to accelerate the delivery of existing support”.
The CBI’S industrial trends survey revealed business sentiment and investment plans in the manufacturing sector worsening at record rates (since 1958).
The survey of 330 firms in the sector revealed the quickest fall in new orders since 2009, with business optimism plunging at a record pace. There were also falls in domestic and export orders.
Manufacturers surveyed said they expected the quick fall in output in the quarter to April to be followed by a sharper contraction in the next three months. Twothirds of firms faced cash flow difficulties, while around half reported a partial shutdown, the survey also found.
The CBI added that with lockdown renewed and the crisis continuing, no sector has been left unaffected. It recommends two steps governments should take now to get faster support to distressed firms.
The first is accelerate the delivery of CBILS to smaller firms, for example, by upping the government guarantee from 80 per cent to 100 per cent for such loans up to £500,000, “which could improve speed of delivery – though it is not a silver bullet”.
The second is providing all firms in England, Scotland and Wales with a three-month business rates suspension (as in Northern Ireland) and consider grant schemes to help smaller firms unable to access existing support.
CBI director-general Dame Carolyn Fairbairn said help must get where it’s needed most. “The current loan scheme is up, running and working for many. Now we need another big push to get money out the door faster.
“This is a race against time, and the only winning strategy is scale, speed and simplicity. Nothing should be left on the table.”
The Treasury, British Business Bank and lenders deserve great credit for their “speed and ambition” so far, she said, but warned that there is “no room to pause”.
She added: “These recommendations are based on thousands of conversations with struggling firms of all sizes and aimed at helping those who have been left behind so far. A new wave of support is vital to local communities and our small and mid-sized businesses.
“The greater the number of companies helped to survive, the sooner the UK economy can restart and revive.”
“This is a race against time, and the only winning strategy is scale, speed and simplicity. Nothing should be left on the table.”
DAME CAROLYN FAIRBAIRN