CHANCELLOR Rishi Sunak is being urged to tell business owners how long they can rely on his support to meet their operating costs.

Alexandra Withers, chairwoman of R3, the region’s insolvency and restructuring trade body, said companies should be made aware ahead of the spring budget and the scheduled end of some of the support measures the Government put in place to mitigate the impact of the pandemic.

As things stand, restrictions preventing landlord forfeiture action, the ban on winding-up petitions and the suspension of wrongful trading liabilities are all due to end on March 31, with the furlough scheme scheduled to last until the end of April.

The eventual removal of these support structures will once again leave businesses liable for covering all their usual operating costs, as well as susceptible to the risks and penalties of not doing so.

A number of extensions have previously been given in light of changing

and challenging circumstances, but Ms Withers believes that, while everyone accepts that the measures will come to an end at some point, the lack of certainty around when that will be is making it harder for directors to plan for the future.

Ms Withers, who is an associate solicitor in the insolvency department of Short Richardson and Forth Solicitors in Newcastle, said: “The support measures and protections put in place by the Government have undoubtedly made a huge difference, which has been illustrated by the fact that, despite the prevailing economic conditions, the number of corporate insolvencies actually fell in 2020 compared with the previous year.

“But despite this, a wide range of North-East firms have still barely kept their heads above water, and the clear concern is that a sudden return to having to meet their full cost liabilities in an economy that’s not yet fully functional will be enough to push many of them under.

“What would really help business owners is for the chancellor to give them the maximum amount of notice possible about whether he’s going to extend the support measures that currently remain in place, or whether he will stick to the current timetable for their removal.”

The Insolvency Service’s official figures for 2020 showed a 27.1 per cent year-on-year fall in the number of corporate insolvencies across England and Wales, from 17,224 in 2019 to 12,557 last year, but also revealed a 16.9 per cent increase in the underlying number of corporate insolvencies in the final quarter of the year from the previous quarter.

Ms Withers said: “The recent increase we’ve seen in the

corporate insolvency rate suggests that the economic impact of the

pandemic may now finally be being realised, and it’s plainly a question

of when, not if, insolvency numbers will increase this year.

“Many firms have been keeping going by generating much-needed cash

through selling off different assets, but this can only ever be a

short-term strategy and there will obviously come a time where there is

nothing more left to sell.”

The Treasury has been contacted for comment.