Commitments must be delivered if small businesses are to survive: FSB, BCC

National chair of the Federation of Small Businesses (FSB), Martin McTague, said the political turmoil and chopping and changing have made it virtually impossible for businesses to plan and make investment decisions.

“Legislation must pass swiftly in both chambers of Parliament so that cash can reach small businesses next month — this will be a lifeline for many facing a tough winter,” he said. 

“The review to come on business and consumer energy support after six months must avoid a cliff-edge for small firms that remain impacted and vulnerable.

“The decision to de-couple those paid through dividends from the reduction in National Insurance will be a blow to many small business owners trying to keep their heads above water. Dividend taxation doesn’t just hit investors — it hits hard-working entrepreneurs with bills to pay.

“In time, as public finances allow, we would like to see the Government revisit this, along with issues such as IR35 rules, and the level at which the hiked rate of Corporation Tax kicks in.

“Small businesses want to be growing and investing, but will need economic conditions to improve and sky-high operating costs brought down in order for them to be front and centre of future economic recovery.

“There are significant recessionary pressures causing severe problems for small firms and the people who work for them — while the Chancellor has focused on reassuring markets today, the Government must combine this with pro-growth measures that support the real economy.”

Shevaun Haviland, director general of the BCC, said following the economic turmoil of the last few weeks, the Chancellor had to press the reset button.

“But businesses will be dismayed by the decision that looks set to strip back the energy support for firms from next April. This will be a hammer blow for many who were already worried about how they will survive,” she said.

“The government must commit to a full consultation with firms ahead of that cliff-edge to provide some certainty on where any targeted support will go. Energy costs keep business owners awake at night, alongside rising inflation and interest rates.

“Keeping support for the NICs reversal in place will be some relief for hard-pressed firms, but on its own will not be enough.

“The Chancellor has a delicate balancing act to carry out. He must restore order to the markets if he is to prevent further damage to business and consumer confidence. But if he is serious about stability and growth, he must speak to our Chamber Network to truly understand the pressures firms face.

“People run businesses and businesses rely on people. The Government is failing to fully understand that the cost of living and cost of doing business crises are two sides of the same coin. We still need a clear vision on how it will support firms and the communities that rely on them to thrive.

“It must be clear in how it plans to do this, to prove it is serious about helping businesses through the difficult months ahead. Time is of the essence.”

Barret Kupelian, senior economist at PwC, said the big question is what the Bank of England will do next.

“It is still too early to tell as we still don’t have clarity on the full suite of policy measures adopted and likely to come,” he said.

“However, based on the Chancellor’s announcement it is apparent that there will be much less stimulus in the economy relative to supply. This could mean the pace of monetary policy tightening around interest rates could slow down, relative to expectations after the September mini-Budget.”