The UK appears to be entering the next phase of the pandemic, where government support needs to begin to recede, according to former Chancellor of the Exchequer, Philip Hammond.
Hammond, who was Chancellor under Theresa May’s premiership, made the comments today at the CFO Virtual Agenda. He told delegates that in order to effectively manage the withdrawal of governmental support, more sector-specific liquidity would be necessary.
“The government has to move away from a generalised swamp the system with liquidity approach to a much more tailored and specific approach, supporting businesses, households, people, employees to restructure, retrain and redeploy for the new sustainable economy of the future,” he said.
This did not mean that the government would support those businesses most likely to collapse, Hammond cautioned. It was inevitable that some businesses would fail and some jobs would go, he said.
“The role of government is not to try and stop that happening, it’s to try and allow it to happen in a smooth and orderly way.
“Employees who are going to lose their jobs need to be able to access training and support so that they can find the skills necessary to find new jobs in the newly structured, emerging economy,” Hammond added.
It seems clear that government support is beginning to taper off, with the Coronavirus Job Retention Scheme (CJRS) or “furlough” scheme, ending on September 30, 2021, while the Coronavirus Business Interruption Loan Scheme (CBILS) came to an end in March 2021.
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No major tax rises before 2024 election
In a wide-ranging interview at the CFO Virtual Agenda, the former Chancellor accused Prime Minister Boris Johnson of wanting to have his cake and eat it on tax. Hammond says that with so much spending already incurred since March 2020, tax rises are necessary and inevitable, but that Johnson is reluctant to risk the ire of the electorate.
“From what I’ve heard so far, it’s very much a case of Boris’ famous cake and eat it quote – he wants to do more public spending and keep taxes low. Well, every Chancellor in history has aspired to that, but there isn’t an easy way of squaring that circle.
“I do not expect to see this government increasing taxes any further before the next general election,” he added.