I delayed writing this week’s post. It seemed sensible to wait until the Chancellor had delivered his Summer Statement, then we’d know which way the economy was going – and I could make some useful comments about the future.
So here I am on Thursday morning, looking at the newspaper headlines and a picture of a smiling Chancellor serving up two plates of food. And I don’t know what to think.
I have some sympathy for Rishi Sunak. Irrespective of his background and experience he’s new to the job. And here we are with the biggest crisis/recession since the Second World War, the Depression or the Great Storm of 1703.
One phrase in his speech really hit home for me: the UK economy contracted as much in April and May as it had grown in the last 18 years. There are clearly going to be some record-breaking ‘recovery figures’ in the months ahead – but in many ways they will simply emphasise how great the contraction in April and May was.
You’ll know all the main details of the Chancellor’s speech by now: businesses offered £1,000 for each furloughed worker they retain until January; money for training and apprenticeships; a temporary increase in the stamp duty threshold to try and kick-start the housing market; a similarly temporary cut in VAT to help the hospitality and tourism industries and the move that has sparked all the headlines - £10 off a meal in August, as the Chancellor urges us to ‘eat out to help out.’
Will Dav and I take advantage of the £10 ‘meal deal’ reduction. Yes, of course we will. We’ll be off to see Annie and Kirsty at the magnificently named Queen o’ t’Owd Thatch. And yes, we’ll take the boys with us. The Thack won Best Sunday Lunch in 2018 – that should keep Dan and Rory full for a good two hours…
But let’s look at the wider picture. Will a reduction in VAT really encourage more people to eat out? Will lifting the stamp duty threshold to £500,000 really get the property market moving if people are still worried about losing their jobs?
By and large, the moves have been welcomed – with the usual caveat about borrowing which, according to the FT, will exceed £350bn. But we’re in completely uncharted waters – and it’s a long time to wait until a Budget in the murk and gloom of November.
…Which is why I think Rishi might take action before then. As we’ve seen today, both John Lewis and Boots have announced job losses, and I cannot believe he means to surrender the UK high street to Jeff Bezos. So don’t be surprised to see more action to save jobs – especially in the retail sector – before November.
Having acted to save jobs, Rishi Sunak then needs to create jobs. Yes, the green jobs initiative will help. But if there are 4m unemployed – which there could well be – then it is only expanding SMEs who will ride to the rescue. And having praised the Chancellor, let me now criticise him – because the lack of support to directors of small companies who pay themselves in dividends (as this Government and others consistently encouraged them to do) will not help job creation.
Right now circumstances are – to adapt the old cliché – forcing the Chancellor to give a man a fish. Let’s hope that come the Budget he can create the conditions where we look at each other round the TAB table and say, “Thanks, Rishi. Now I’m going fishing. And I’ve hired a couple of blokes to come with me.”
But between now and then owners and directors of SMEs face a period of real uncertainty. None of us know what the ‘new normal’ will look like, none of us know if there’ll be a ‘second spike.’ But we still have to try and go up the ladders – and avoid the snakes.
Part of avoiding the snakes will be planning like we have never planned before and – as I have written previously – ‘worst case scenario planning’ is going to be vital. As is monitoring your KPIs. We cannot let things slide – and don’t ever think ‘I’ll see what happens and bring that problem to the Board next month.’ As we have seen, quite a lot can happen in a month…
I read an article suggesting that Rishi Sunak’s meteoric rise to 11 Downing Street was based on two bets: one on Brexit and one on Boris. I suspect that the success or failure of his political career may well be based on his third bet. And to keep the alliterative theme, that bet needs to be on British businesses – and the people that run them.
Hopefully the Autumn Budget will bring a raft of measures that will free entrepreneurs from red tape and offer real incentives and help to build businesses.
So let’s hope you go even further than taking those two blokes fishing with you. That you say to the other Board members, ‘This time next year I’m opening a canning factory…’
