Now is the time to be more competitive on tax to help existing businesses
Cobra Beer magnate Karan Bilimoria says the fallout from coronavirus is the worst situation he has experienced
London — Karan Bilimoria started Cobra Beer in the middle of a recession and was blindsided by the 2008 financial crisis — but the fallout from coronavirus is the worst situation he has experienced.
“It’s a supply shock, demand shock and health crisis that’s caused an economic crisis and it reverberates down the supply chain,” he said in an interview at Tamarind, an Indian restaurant in London’s Mayfair, as he sipped a glass of his double-fermented lager.
In June, while he was working to shore up his company, Bilimoria became president of the UK’s biggest business lobby, the Confederation of British Industry, which represents 190,000 firms. The CBI has been advising Rishi Sunak, UK chancellor of the exchequer, on what businesses need most during the pandemic. Sunak’s new wage subsidy programme looks set to closely mirror the CBI’s own proposal.
Bilimoria contracted Covid-19 himself in March. He continued working from his sick bed, he said, and called into a CBI board meeting to make hiring decisions. Among his symptoms were a loss of taste and smell — a bitter pill for someone who delights in fine food.
Bilimoria, who also serves as chancellor of the University of Birmingham, talked about Covid, Brexit and why a bright green, battered car he called Albert is his greatest regret.
Comments have been edited and condensed.
How has your experience of the pandemic been?
Like being thrown in the deep end during the worst crisis we have experienced since World War 2.
What’s your advice for entrepreneurs in these times?
You have to be adaptable to survive in times of crisis. I have a mantra: adapt or die.
What has the CBI been doing?
Early on we came up with the coronavirus hub, holding webinars for businesses.
We’ve also been the voice of business to government. We’ve fed into all areas. Credit to Rishi coming up with innovative measures. They have listened to us. The job retention scheme has saved over nine-million livelihoods and we played a big role in coming up with the scheme and extending it. I said the first thing businesses need is cash and access to loans, but banks will be reluctant to lend in a crisis so loans must be guaranteed and will only flow through if the government guarantees 100%.
In the early days of Cobra I took out government guaranteed loans totalling £245,000. They helped me get my business off the ground. I know how difficult it was to get those loans.
Which sector are you most concerned about?
The airline sector is on its knees. Heathrow was down 95% at many stages. The government is helping with rates relief for retail and hospitality but not to airlines. Heathrow’s rates bill is over £100m per year.
If it helps save businesses, I personally think they might have to increase the limit of Bounce Back loans to €500,000, like in Germany. Government help can’t have a cliff edge; it must react to the disease.
What’s the long-term solution?
The only solution is a vaccine. Until it becomes widely available, the best way is mass testing. The government says capacity will reach 500,000 by end-October. The Abbott Laboratories test in the US is $5, it uses a swab and takes 20 minutes for a result. If we could have that test at £2-£3 and the whole country tests twice per week, you don’t need social distancing or quarantine. The cost for 66-million people is a fraction of the £200bn of support we have been giving.
How should governments pay for virus relief?
Any talk of raising taxes in my view would be completely wrong. Now is the time to be even more competitive on tax to help existing businesses and to continue to attract inward investment.
That doesn’t mean Singapore-on-Thames. UK corporation tax is one of the most competitive at 19% except for Ireland, which is 12%. The biggest tax revenue comes from personal taxes. The key is to maintain jobs as the moment you have unemployment you lose that income and have to pay benefits.
Now is the time to survive, restart and once we’re up and running we can talk about paying back the debt. That’s best done by growing the economy.
What about Brexit?
It doesn’t matter whether you’re a remainer or leaver, we’ve left. I felt we should have remained but I was also very critical about how the EU operated. We have got to make the most of it, get the best possible deal and maintain as much as possible duty-free, frictionless trade with freedom of movement of goods, services and people within the EU, which makes up 50% of our trade.
No-deal would be disruptive and very difficult for business to handle, especially with the crisis we are dealing with at the moment. That’s a genuine fear.
There’s also the possibility of tariffs and things being more expensive in shops. It will hit the consumer who’s already so badly affected by the crisis. I’m very confident we are close to getting a deal through pragmatism on both sides, whether it’s fishing or state aid issues.
How have universities fared in the crisis?
It has to be a government priority to support that sector. They’ve been going through a very tough time. For international students it’s a big uncertainty. Some universities have considered chartering planes to bring students here. I can’t name them, but there are universities that really have suffered financially.
What about the green agenda for business?
The government needs to invest in infrastructure such as battery technology. My dream is to have battery charging stations instead of petrol stations.
At the University of Birmingham, we won the Queen’s Award for our railway department. When Prince Charles gave us the award I said: “Your Royal Highness, we will power the royal train with hydrogen.” It’s the cleanest form of energy. To make these things a reality we will need a green infrastructure bank.
What’s your schedule like?
Today is typical. I started and ended the day with CBI work, I spoke in the House of Lords and had Cobra meetings in between. Yesterday I met the head of the medical school for Birmingham University on testing and what we’re doing for our students.
What do you do for fun?
I have four children. Spending time with family is most important to me. I play tennis, I spar at the gym and I scuba dive.
What’s your greatest regret?
Getting rid of our first company car, a battered Citroën called Albert. It was bright green, cost £295 and needed push starting every day. You could see the road through the holes in the floor and it thrice failed its MOT. I wish I’d kept it because that’s where it all started, delivering cases of Cobra.
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