Mr chancellor, please think carefully on where you spend taxpayers' money
01 April 2020
As I write this on the evening of Thursday 19 March, the news is ever-changing
In fact, there is currently a rumour circulating that the chancellor could underwrite £17,000 of salary for every worker by waiving income tax or national insurance to try to stem the huge wave of redundancies that follow – if so, that would be a huge step in the right direction if you look at the bigger picture outside of our day to day world.
This may well alleviate some of the concerns that I will outline below, but as I am on a deadline I will proceed with my original piece as I hope it brings into focus the real issue here that is often missed when talks of economic ‘bailouts’ are concerned – people, not profits.
It is very easy to forget as professional advisers that there is a huge personal impact that we must be aware of and do our level best to ensure that we look after the workforce as best as we possibly can.
There has been huge underfunding in recent times, which worries me hugely and now we are facing an even bigger challenge. Just look around your workplace right now, you will be working from home via ‘remote working’.
Consider that phrasing for a moment ‘remote’...
Please remember that right now, there is a large population of this country who are worried about whether they have a job or if they are being weighed in the scales of logical business decisions.
Earlier this week
It already seems so long ago as we all buckle down and face the new challenges of remote working and social distancing. However, the announcement from the chancellor earlier this week was certainly welcome news for many business owners facing financial hardship over the coming weeks and months but as ever, the devil will be in the details.
It was a huge move and felt pretty radical but on reflection, I had three key questions:
- How far will these measures go and will there be enough support to go around?
- Which businesses will they will lend to?
- What will the lending terms be?
Bailing out sinking ships
This is a difficult one, especially in our industry and our roles.
What we are currently seeing in the insolvency industry are businesses that were already insolvent on their balance sheets electing to go insolvent, knowing that Covid-19 will be the final nail.
However, the question is, how many of these businesses are now likely to hang on for a financial bailout and will the government and ultimately the taxpayer be willing to bail these firms out?
It's one thing to focus on the economy but there is a HUGE human impact to all of this, which is currently being overlooked.
Remember, I am writing this before any further announcement from Rishi Sunak
Let’s look at the harsh reality here. Frankly, the death toll could be really high, meaning that many of us will be affected emotionally and mentally in the near future and potentially when we all return to the workplace.
Morale will be fragile and it may be incredibly difficult to get your employees back to work and motivated to ensure productivity and output reaches levels prior to the lockdown.
Finally and most critically, we all need to spare a thought for those people in society that won't have a job either during the government lockdown or when we are allowed to return to the workplace.
Priorities in tough times
For our sector, the priority should be to get as many redundant employees as possible paid their redundancy entitlement rapidly – either via their ongoing employer or out of the NI fund via the Redundancy Payments Service (RPS).
As such, I would like to hear what plans the chancellor has in place to ensure people in this situation are granted payments within days of redundancy happening, so at least their short term future has some hope.
Again, we may well hear something imminently but we shall see. If so, perhaps he will have been listening to these concerns already which is heartening.
In recent times the RPS has been massively under-resourced, resulting in delayed payments, and if the RPS is not better prepared, then this will only add to the mental wellbeing pressures for these members of our society.
So, Mr chancellor please think carefully where you spend taxpayers' money. I would like to see support for wellbeing charities and redundant employees over saving businesses that were already insolvent prior to this crisis.
Darren Toms is managing director at Clumber Consultancy