MANY more businesses face failure after the furlough scheme ends at the end of September, it has been claimed.

Rishi Sunak’s second Budget yesterday set out a host of support measures including longer furlough, more help for the self-employed and a six-month extension to the reduced VAT rate for leisure and hospitality.

Mike Pavitt, partner in the corporate restructuring and insolvency team at Southampton law firm Paris Smith, welcomed some of the measures but added: “For me, this Budget does not do enough to address the involuntary increase in corporate and personal debt which Covid has brought and which is a growing into a millstone against future recovery.”

He added: “The chancellor seemed resigned to the likelihood of unemployment peaking in 2022 at 6.5 per cent. That obviously implies that he expects many employer businesses to fail after furlough and enforcement moratoria come to an end, and yet no plan was in evidence to help businesses restructure and no commitment to working across government to take an active and supportive role in that.”

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Hampshire Chamber chief executive Ross McNally welcomed the news that the Solent freeport bid had been approved.

“Many Hampshire firms, including those involved in innovative, high-growth sectors such as green technology and advanced manufacturing, will also be cheered by the tax relief on investment, especially what’s known as a ‘super-deduction’, meaning the government effectively pays you to invest in capital and productivity,” he said.

“We have consistently called for government support for business to be commensurate with the overall Covid recovery plan. The chancellor has responded to many of our concerns with measures to shore up businesses’ cashflow. The extension of the furlough scheme will be a lifeline for those who were at risk of an imminent cliff-edge withdrawal and now have more time to plan and rebuild. Likewise, the new restart grants and continuing VAT relief will afford some precious breathing space for struggling high street shops and hospitality firms.”

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He welcomed an extension of the business rates “holiday” until June and the reduced rate afterwards, but said full reform was “long overdue”.

“And many larger companies who do make profits as we emerge from Covid will face higher-rate corporation tax in 2023. This is a potential drag on investment and job creation in the meantime, but it is good news that smaller companies will be exempt from the rise,” he added.

Michaela Johns, director of Hampshire accountancy firm HWB, said: “Overall the Budget statement is good news for business and hearing that entrepreneurs’ tax relief remains intact, will be particularly welcomed.

“The question remains, how will all of this be paid for? UK debt is going to be increasing for some years yet and it doesn’t look like the amount collected via corporation tax will tackle that.”

Tim Walker, managing director of Aura Technology in Southampton, said: “Although times are still tough for many businesses and we have a way to go until full confidence returns, there were plenty of reasons to be optimistic in this Budget.

“Businesses will have been pleased to see confirmation of the extension of furlough, which has been a lifeline throughout the pandemic and will help secure many jobs. That support is vital as we go through what we all hope is the final stage of this crisis.

“However, it’s not just about surviving the present – we all have a hopeful eye on the future, and it was heartening to see new measures that should build optimism.”

Rob King, director of Southampton based King Property, which specialises in the first time buyers market in Hampshire, said: “The extension to the zero rate of stamp duty to June and September means buyers have another three or six months to get their purchases through, which should alleviate some of the bottleneck that was created by the March deadline.

“And the government scheme to encourage five per cent deposit mortgages is an excellent opportunity for first time buyers who have struggled with the higher deposit requirements they’ve faced in 2021.”

The chancellor also announced free advice on technology to help small and medium sized businesses through the Help to Grow: Digital scheme.

They could also receive 50 per cent off productivity-enhancing software.

But Michael Oszmann, Lymington-based founder of the online marketplace, said: “In a time of crisis, I don’t think an ‘MBA-style’ training scheme is what SMEs need right now. They are extremely busy and stressed just staying afloat.

"In more normal times, this could be a great initiative to boost productivity but right now, I think that our SMEs need simpler and more direct support and funding in the form of grants or adjustments to taxation."