Covid-19 – Worse than a war
Covid-19 is set to drastically impact the vast majority of British Indian owned businesses in the UK. To combat this, our new Chancellor of the Exchequer Rishi Sunak announced a set of comprehensive measures last week to support British businesses to deal with the crippling nature of this pandemic. The measures were widely welcomed by the UK’s business community, particularly British Indian businesses, making Rishi the blue-eyed boy of the nation.
From the Coronavirus Retention Scheme which is set to underwrite 80 per cent of wages of retained workers up to a total of £2,500 a month, to the Business Rate holiday for thousands of businesses up and down the country, this set of schemes was by far the most draconian set of state intervention measures by any Government in post-war Britain.
However, this is not a war. As days unfold, we have all begun to realise that this crisis is far worse than a war; worse for our economy, worse for our businesses and worse for our investments. Whilst one can understand why the similarity with war is constantly made and why we need war like measures; this comparison is misleading.
Unlike a war, we have hope that this crisis will end. However, for the foreseeable future the economic prospects are bleak. Bleaker than the 2008 financial crisis.
Our economy is under cardiac arrest. Unlike the 2008 financial crisis, which mainly hit our financial services sector, this crisis is hitting the very core of our economy; hard-working businesspeople who are the lifeblood of our country. In just a week, we have seen such businesses implode around us, not due to poor financial planning, but because just like us, no business is immune from this pandemic.
This is therefore not a war. For even in the war, the core of our economy did not shut down in this way. There might have been blackouts during the war, but no lockdowns. Even Harrods, an institution which prided itself on staying open during the war has closed for the first time in its history!
Rishi’s extraordinary intervention is therefore a lifeline for our economy. Don’t forget, it’s always difficult for a Government to intervene in the market in this way – but for a Conservative Government who believes in free market economics and minimal intervention at its core – these measures were simply record breaking. Whilst we accept that these measures won’t prevent the worst recession in history, at least it will mean that we still have an economy at the end of this pandemic.
However, the Chancellor has faced calls to further assist Britain’s five million self-employed people, who feel the measures do not protect them enough. The Government has already announced several measures to help the self-employed, including a deferral of self-assessment payments from the end of July to January. Self-employed people will also be able to apply for interest-free loans for a year guaranteed by the Government. In addition to this, Rishi has removed the minimum income floor for universal credit, making it easier for self-employed people to claim.
Furthermore, self-employed people will also be eligible for support through Her Majesty’s Revenue and Customs’ (HMRC) Time to Pay service. Arrangements will be agreed on a case-by-case basis and tailored to individual circumstances and liabilities. Applications can be made by calling the dedicated Time to Pay service on 0800 0159 559.
The Chancellor has already assured the self-employed sector – worth an estimated £305 billion – that he will continue to review the situation to see what further measures can be put in place to support them. This includes addressing concerns that the current package is pushing people into benefits and building up debt. An ideal solution would be to extend the job retention scheme to the self-employed, but this has its pitfalls and will be duly reviewed.
If we are to confront this economic pandemic, we must go much further than comparing it to a war. This is what our new Chancellor is trying to do. During these uncertain times, I like many other British Indians, have been very impressed by Rishi and have found his approach to Covid-19 to be very reassuring. He is certainly giving the impression that he has a steady hand on the tiller.