The UK must overcome some huge challenges as it battles to achieve economic recovery following the outbreak of COVID-19. With consumer and business confidence both badly dented by the pandemic, the UK’s economy is likely to contract by 11.5% in 2020, according to the Organisation for Economic Co-operation and Development.
At the Chartered Institute of Management Accountants (CIMA), we believe that finance professionals and accountants can play an important role in helping individual businesses to get back on their feet, as well as drive the broader economic recovery. Furthermore, our skills as value creators mean we can go beyond simply counting the numbers to provide the responsible financial leadership that will enable our companies – and communities – to achieve long-term sustainable success.
In that spirit, we have designed a set of 20 recommendations that are intended to support the UK Government as it navigates the challenges posed by the pandemic, restores growth to the economy, and builds business resilience to future crises. Our recommendations concentrate on four key areas:
- Business and consumer confidence
We believe that temporarily lowering the VAT rate would encourage spending by businesses and consumers. Meanwhile, cutting employers’ national insurance bills would help to keep people employed and create new jobs. In addition, the Government could reduce red tape, introduce a Growth Accelerator Scheme to nurture start-ups and small businesses, and support companies of all sizes to adapt their business or operating models to the new reality.
- Reducing uncertainty
By outlining its business tax plans for the next two years, the Government would allow companies to make informed investment decisions. It should also pause plans to implement new business regulations, offer incentives that encourage businesses to diversify their supply chains, and persuade them to build up their cash reserves. A strategic national stockpile could be established to ensure the continued delivery of key goods and services. Furthermore, the Government should ensure the free movement of professionals, as well as mutual recognition of professional qualifications, in future trade deals.
Integrated reporting would help to accelerate the transition to a net zero carbon economy and encourage companies and their regulators to focus on value creation that extends beyond short-term financial returns. Reform of insolvency and administration practices would allow for certain viable businesses to re-structure and survive. Investment in green infrastructure, such as charging points for electric vehicles, is key.
- Investment in skills
Skills are vital to rebuilding the economy. So, the Apprenticeship Levy should be transformed into an Apprenticeship and Skills Levy that employers can allocate to both apprenticeships and reskilling their current workforce. Apprenticeship providers should be allowed to become end point assessors and tuition providers while spending on higher-level apprenticeships should be maintained. There should be a ‘rebuttable right’ to retrain and the Government should create and invest in ‘skills clusters’ across the UK. Generous R&D tax incentives could stimulate innovation.
In its economic response to COVID-19, the Government must, of course, tackle immediate issues such as restoring jobs and increasing consumer spending. Nevertheless, it must also ensure that its recovery strategy addresses long-term issues, including our faltering productivity, widening skills gap and failing social mobility. If it succeeds in this, it will deliver a truly inclusive, lasting recovery that strengths our economic resilience in the future.
Read our 20 recommendations in full here.