Clearly threatening small businesses and the self-employed with tax rises is not the way to revive the economy

What is it about the word “clarity” that the Government struggles with?

Last week it informed us that schools will remain closed until March at the earliest.

The detail remained sketchy. Are we talking throwing open the school gates? Or will it be an organised gradual approach? No clarity at all for parents and teachers.

Meanwhile, any clarity from Government around how it plans to kickstart the economy and what support will be on offer, has been noticeable only by its absence. Still no mention has been made about an orderly withdrawal programme from our third lockdown in less than a year.

Some sources claim we could start seeing the start of a return to normal by around Easter, but on balance this is just wishful thinking. Chancellor Rishi Sunak, tipped by some of the press as our next Prime Minister, must move now to extend the current furlough scheme beyond April. Some predict he’ll announce it in his March Budget. It would be the third extension to the scheme introduced last year which has, so far, cost the Exchequer £80 billion. Clarity would allow firms to keep people on the books for longer. Without it they are already having to plan for further redundancies. 

Meanwhile, directors of small and medium-sized companies are urged to hunker down at home. What’s the alternative? It will be interesting to see how many of them have businesses to come back to once the vaccination rollout is completed.

Last week’s unemployment numbers made gloomy reading and the situation is likely to get significantly worse in the months ahead. It’s true the Furlough Scheme has benefits for businesses and employees alike, but it has also painted a confusing picture of prospects. The final tally of job losses is likely to be a lot higher than current estimates and that will make it harder to pay back the £400 billion of debt that the Government has run-up.

And so the Chancellor has also been raising the possibility of tax hikes, sooner-rather-than-later. His suggestion is that hikes now would enable him to make tax cuts before the next General Election in 2024 (clearly we’ve heard that many times from politicians in the past).

Threatening small businesses and the self-employed with tax rises is not the way to revive the economy. Businesses will need support in the years ahead, not threats designed to tip them over the edge. And the best support of all would be clarity. 

Mickey Clark
Mickey Clark

Mickey has been a financial and business journalist and broadcaster for 46 years having started out as a City Office copy boy on The Times back in 1969. He has written extensively for the Evening Standard, the Express and the Times, and also presented Radio 5 live's Wake Up to Money for over a decade.

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