London Chamber of Commerce & Industry has issued a rallying cry for leaders of the financial and professional services ecosystem in London to pull together to increase bank lending until the Government’s coronavirus support measures are in place – in order to avoid SMEs across the UK going out of business.
LCCI CEO Richard Burge has written to Catherine McGuinness, chair of the policy and resources committee for the City of London Corporation.
The correspondence is in full below:
I am writing to you as the leader of the financial and professional services ecosystem of London. The business impacts of coronavirus on business are here and now.
The major and positive measures announced by the Chancellor are not yet ready for full implementation, and in many respects may be insufficient to stem the tide of lay-offs, redundancies, and collapses rising amongst small and medium enterprises in the London and the nation.
Most SMEs are simply not capable of taking on increased debt, even if it is underwritten by government. They need to retain the cash they have and be certain that there will not be a future call on it which they will not be able to service.
So we believe that in addition to the business rate relief, they need to be able to permanently retain other collected taxes.
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Without bank lending in the interim, however, companies face going out of business. Some have already closed because without financial support they are no longer going concerns.
The UK contains, arguably, the world’s most powerful financial service ecosystem in the City of London and I would like to ask you to issue it with a call to action on three fronts;
- That the UK lending institutions will guarantee, whatever their size or nature, no small or medium sized business in Britain will go bankrupt, or have to dismiss or suspend staff until the details of the government provisions are worked out
- That the City ecosystem will press the Government to offer the three-month permanent grant of collected tax receipts (PAYE, VAT and Employer national insurance) contributions for three months from 1 February.
- To engage with government to find ways that the banking system can provide equivalent cash support to sole traders and the self-employed.
The City of London needs to demonstrate now that it will do everything necessary to support the economic resilience of the whole of the UK.
The leaders of the UK financial services sector need to let the country know they recognise they survived in 2008/09 because of the wide, diverse, and sound economy of the rest of the UK. They must repay that solidarity now – without hesitation or restraint.
Banks will undoubtedly suffer some bad debts. But I believe that the UK finance community must and will demonstrate that it is part of our national survival.
I am absolutely confident that the leadership of the City which has ensured we have recovered from plague, fire, and war, will rise to the challenge and mobilise its ecosystem to deliver what the nation now needs. We stand ready to assist you in any way we can.
But this is now desperately urgent. When we spoke last night I told you of individual cases being reported from across the country by Chambers of Commerce. Those have not slowed this morning. Action by the end of the week is essential.