The government has been urged to use funds repaid by large businesses to support smaller companies that are still struggling amid the pandemic.
Tax and advisory firm Blick Rothenberg has said the money recouped from state-backed emergency lending schemes so far should be redeployed to help small- and medium-sized retailers and firms in the hospitality sector which have been hardest hit by the public health crisis.
FTSE 100-listed luxury goods firm Burberry recently announced that it will repay around £6m in rates relief for its stories, in addition to the repayment of a £300m loan.
And some of the largest supermarkets have pledged to repay rates relief of £1.3bn.
This money should be used to support smaller businesses and not disappear into a “government black hole,” said Mark Hart, partner at Blick Rothenberg.
“The government now needs to provide a clear message on business rates post April 2021 in the upcoming budget,” he said. “This money should be used as part of a fund to allow further sector specific business rate concessions for 2021/22.”
The UK’s largest, investment grade-rated firms were able to access the Bank of England’s Covid Corporate Financing Facility (CCFF) – one of a slew of measures introduced by the government to support businesses of different sizes.
The facility is designed to support liquidity among larger firms, helping them to bridge coronavirus disruption to their cashflows through the purchase of short-term debt in the form of commercial paper.
Hart added that the government should build on the good news around large corporate repayments and provide further clarity to businesses in the hardest hit sectors.
“Many of these businesses have exhausted the other support measures in place and have critically low cash reserves,” he said. “Knowing that their rates bill will be reduced or extinguished would be a real boost and allow more of them to be viable and continue to trade in 2021.”