The UK government needs to create a successor to its furlough scheme to protect jobs, according to CBI boss Carolyn Fairbairn, who warned that a large number of redundancies were expected this month as companies prepare for wage support to end in October.
In an interview with the Financial Times, Dame Carolyn also cautioned against raising corporate taxes, urging ministers instead to extend the range of business support measures and invest for future growth. A number of reports in recent days have said the Treasury is considering significant increases in corporation and capital gains taxes, although officials have not confirmed their plans.
“The autumn is a watershed time. If we can grab that V-shaped recovery now with the right actions over the next two to three months, we have the opportunity heading into the new year feeling much more confident about the UK,” she said.
But she also warned there was a “real risk” that offices would “die by accident”, and called for the government and employers to do more to encourage workers to return to the workplace.
Dame Carolyn will stand down in November after serving her five year term at the helm of the CBI, with Be the Business boss Tony Danker appointed as her replacement.
She described her period leading the organisation as “obviously quite challenging”. When she took the role in 2015, the government under David Cameron appeared set for a period of relative stability. But instead her tenure has been dominated by the Brexit referendum and subsequent arguments about the shape of the UK’s exit from the EU. Since March she has also been working with the government to help businesses during the pandemic.
Dame Carolyn urged the government to strike a deal with the EU, warning that business resilience has been brought “so low” in the coronavirus crisis.
“We are at the eleventh hour again. It is back on every board agenda,” she said. “Cash reserves and stock built up to deal with the cliff edge Brexit last December have gone. They are at rock bottom. The resilience of the economy is not there. We always had a challenge around small businesses being ready and it will now be more serious.”
Dame Carolyn also called on the government to extend its support for businesses hit by the pandemic. She acknowledged that the government’s job retention scheme in particular had been “an absolute lifesaver” during the lockdown, adding that it had been “very costly but the way it’s kept businesses alive has been phenomenal”. But she said that more help was needed.
The CBI is pushing for a package of further business support for companies ahead of the autumn Budget, expected in November, including a replacement for the job retention scheme when it ends in October.
“Many companies will find that cliff edge very difficult to manage,” she said, pointing out that about a quarter of businesses in hospitality, leisure, retail and travel have warned they are at risk of insolvency. “It’s too soon to pull business support away at the end of October.”
Dame Carolyn said any new scheme should not support jobs that were never going to return, and should adopt a more targeted approach for companies most at need, with less generous terms than the existing regime. Workers could commit to a minimum of 50 per cent of their normal hours, for example, and clawbacks could be in place for unused money.
She warned that companies relying on the furlough scheme would start to think about redundancies from the middle of September — to allow for the 45 day notice period needed for redundancy proceedings ahead of the end of the October cut-off.
The wages of 3.8m people were still covered by the furlough scheme, Dame Carolyn pointed out, adding: “There was a real potential where we were heading for 3m job losses [before]. We have an opportunity now to constrain that.”
The CBI also wants the government to defer VAT payments for a further quarter next year, and to extend the loan guarantee scheme that has supported bank lending to businesses.
It is calling on the authorities to improve the management of local lockdowns and quarantine measures, which she described as “extraordinarily challenging” for businesses.
Dame Carolyn, who will return to the office next week for the first CBI executive meeting held in person since the pandemic began, said it will take time for workers to return to offices and predicted that in future there would be a hybrid of home and office working.
But she urged the government to restore confidence for people to return to the workplace, and pointed to practical ways to help, such as flexible season tickets on public transport and help with childcare.
“These are all practical things where the government has a role to play,” she said. “The centres of Bristol, Birmingham, Manchester and London are extremely quiet. That’s not true of Amsterdam or Paris.”
This week, the prime minister claimed that “huge numbers” of people had gone back to work, although transport data shows significantly reduced volumes of commuters returning after the bank holiday last week.
Dame Carolyn said “there won’t be a stampede” of office workers but that companies would seek “slow and careful” experimentation to bring back staff.
The office may not “come back in all its glory . . . but it has real value”, she said. “Employers have a role in making office life enjoyable again. If they are soulless places with only a trickle of people, then it won’t work. And we will have lost something.”