Small business owners must not bear the brunt of this epidemic

Rishi Sunak must resist the temptation to ‘wait and see’ and end the punitive measures crippling the UK

If you think you might be suffering from the new viral pestilence, you are under official instructions to self-isolate. That means that you must not go to work. But don’t worry, the Government has ordered that you will be paid sick leave from the first day of your enforced absence, rather than having to wait the usual three days. Which is very decent of it.

Except that it won’t be the Government that is paying you, of course. It will be your employer – even if you work for a small business that is already in jeopardy from the economic slowdown that has been caused by the virus itself or by the panic that it has rather bewilderingly engendered.

So the Government has performed quite a neat trick: it has made itself look benevolent and conscientious at no cost to itself, while throwing the burden of this public responsibility on to businesses that are likely to be in danger of collapse. (Of course, if the pestilence should peter out in the UK, the Government will win again. Either the public will conclude that they took exactly the right measures to deal with it, or that this was just a media frenzy which official advice did not warrant.) But the damage to small businesses is as nothing to the impossible dilemma presented to those who are self-employed, for whom there is no such thing as paid sick leave: for them, the injunction to “self-isolate” is simply an invitation to starve.

This brings us to what should have been the show-stopping event of the coming week. The first Budget from Boris Johnson’s Government was going to be a serious plan (wasn’t it?), a systematic outline of where his Government was going: it would make clear the major objectives of his economic policy. At last, we would get some detail to fill out his promise to “level up” the neglected parts of the country, which is what put him in Downing Street.

Which sectors would be favoured? What sort of infrastructure projects would be added to the list that began with the contentious HS2 commitment? Would there be tax cuts to encourage growth, or new taxes inspired by the green agenda? This would be the moment of truth where the inspirational rhetoric ended and the genuine measures began. And then along came the coronavirus, which put a stop to politics as we know it.

In his interview with The Sunday Telegraph today, the Chancellor, Rishi Sunak, promises that the Treasury “might look at some targeted options to help ease the strain on businesses’ cash flows”. This at least is a positive sign, particularly since the Chancellor could probably get away with a wait-and-see holding operation (couldn’t he?) in which everything is stalled until we find out what sort of state the economy is in after this epidemic runs its course.

In fact, such a nothing-much sort of Budget would be an unforgivable cop-out. When the global economy is almost certainly heading for (at least temporary) recession and the UK is facing a daunting (maybe exciting but certainly uncertain) future outside of the EU, this is no time to do nothing.

The sectors that are facing the most immediate difficulties from the coronavirus crisis need help. Which is to say, they need the Government to stop threatening them with punitive burdens – and this Budget, to be released at the peak moment of national concern, is the time to do it. Small businesses that have to endure the absence of even a few staff on sick pay, and sole traders who rely on their own activity to generate income, may well not survive if the Treasury does not relent on some of the more blood-curdling measures it has devised to persecute them. It is not practicable for the Government to hand out cash compensation to all: it would be impossible to judge how much was appropriate or how it might fairly be distributed. But what it can do, as a matter of urgency, is call off the Treasury hyenas who regard self-employment as a legalised tax dodge and will stop at nothing to discourage it.

What had been promised for the Chancellor’s statement on Wednesday was a whole tranche of policies designed to remove what the Treasury calls “loopholes”: that is, measures that went some way to offset the terrifying risks which the most self-reliant people in the economy – entrepreneurs and those who work alone – are prepared to accept. First, there was the relief that entitled small business owners to a lower rate of capital gains tax when they sold their businesses, which was the only way many of these individuals could finance their retirement. That was going to be abolished. Then the infamous IR35 rule that forces freelancers working under contract to be taxed as if they were employees (but without most of the benefits of full-time employment) was to be extended to the private sector.

And what was easily the most gratuitous form of torment to be inflicted on small businesses and self-employed individuals – the Making Tax Digital system for VAT payments – was not, it seemed, up for reconsideration. This in spite of the fact that both the Association of Tax Technicians and the Chartered Institute of Taxation had declared it to be, virtually in so many words, worse than useless: far more expensive than anyone had been warned to expect, and leading to more, rather than fewer, errors in VAT reporting. (How many tradesmen were driven into the black economy by fear of being caught up in this hopelessly daunting new digital VAT system – and how much revenue was lost as a result? Sometimes the Treasury’s clever plots can be counterproductive.)

The people most likely to be taken down by the economic consequences of the present emergency are precisely those who the country – and the Government – most need to flourish, not just in the immediate aftermath of a possible epidemic but in the post-Brexit decade. The start-up merchants, the daring innovators, the artists and craftsmen who work in Britain’s great creative industries, and the hard-working tradesmen: these are the risk-taking, productive, selfreliant individuals who will make the country’s future. They need a break, and they need it now more than ever.

The people most likely to be taken down by the present emergency are precisely those who the country most needs to flourish in the aftermath of an epidemic and after Brexit