It’s been a very long year for Bacta CEO John White. He’s been right up close and personal on Zoom with all the government departments in all the devolved administrations and met with brick walls, concessions, support, rejections. And then there’s the daily contact with members frustrated by the government’s stop start Covid strategy. Here, he talks about what’s happened to the supply chain and sets the stall out for another campaign – urging the government to avoid taxing businesses to recoup its losses. And for the supply sector that’s actually increased its debts to keep afloat – paying more tax is not a palatable prize for survival.
JOHN WHITE CHIEF EXECUTIVE BACTA
The supply chain has been unable to access many of the government’s support measures. What impact is this having on the sector?
Well obviously this is having a devastating effect on this part of the industry and at the end of last year, when we ran a poll of our members, it was clear that manufacturers, distributors and suppliers were even more badly affected in terms of income loss and redundancies.
We will see more people lose their jobs before this is over.
I continuously make the point to Government that without a supply chain the economic recovery when it comes will be restrained at best.
Supply chains feed demand with product and support the customer end of the chain with credit.
If you don’t husband the supply chain it simply won’t be there. In a nutshell.
How have businesses in the supply chain managed to function in the absence of these measures?
They have had to rely on the one thing they have been able to access, which is furlough. The stopping and starting of trading which happened over the summer until the end of the year has actually proved to be more of a hindrance than a help for many of our Division 2 members, as it has been a logistical nightmare, sometimes forcing them to keep a head office open to manage operation in only one or two areas legally allowed to open.
Overall, we are seeing these businesses losing millions in turnover every week, which is eating into their cash reserves. Clearly this is not sustainable.
What measures are required to protect the supply chain over the coming year?
Firstly, we need some stability – so while we are eager to get pubs open again, we would rather that this is done when there can be some confidence of keeping them open.
Some of our Division 2 members are reporting that the situation regarding Government loans is currently causing problems, with no further borrowing allowed unless businesses can prove they are in distress – clearly this is a situation that needs addressing.
We also believe there should be business rates relief for these companies who are dependent on pubs and bars being open – not just for the actual public-facing businesses.
The supply chain has not been recognised as part of the industry when it comes to support measures. Why is there a blind spot to the supply chain, and how can this be changed?
I think there are a number of reasons for this. Firstly, these businesses are not as visible to the general public as an actual pub, bar or restaurant.
Then there is the quantity and variety of suppliers that would qualify. There has been some support for the supply chain in England and Scotland but it is not enough and it has come too late. We require backdated rates relief.
Then in Wales, I think we have definitely observed a certain lack of appetite when it comes to supporting businesses involved in the gaming machine sector. The government response has been to point to other business support measures available. What are your views on:
Government support for for self employed directors paid through dividends?
Clearly the support offered should have been in line with that available to those who are employed. Self-employed directors are often the heads of small to medium sized businesses that form the backbone of the UK economy.
Bounce back loans: are they lifeline or another long term debt?
Bounce back loans have supported many businesses during this time and were introduced swiftly with minimal barriers for applicants to access funds.
The terms are generous, which is what was required. Ultimately, however, they are loans that will need to be paid back.
We would call for the payback period to be extended, so as to afford businesses greater security to get back to their pre-COVID trading levels.
What measures are needed to get businesses through the next five months if they are not able to trade at all?
We all want to be open as soon as it is safe to do so. However, we really require a clear road map out of this situation, based on the vaccinations of the vulnerable, testing and information on return to schools.
Furlough needs to be extended to cover the entire period of restrictions albeit it can be tapered away as businesses get back to trading.
Likewise rate relief. We also need assurances that grossly unhelpful measures such as curfews will not be re-introduced.
In the meantime, for those businesses that need further loans to survive, this needs to be facilitated – especially for healthy businesses who will not otherwise be able to continue to trade.
Tax cuts are going to be a very useful part of the support mix over the coming years.
The last thing we need is the government to think it has to tax industry to repay the loans it has taken out to fund pandemic support.
We need to look over the long-term, tax cuts will get industry moving.
Once that is embedded into a global recovery a long-term roadmap to a sustainable future is required, not knee-jerk policy making and political quick wins.