End the turmoil and focus on policies for prosperity, business groups tell new PM

National chair of the Federation of Small Businesses (FSB), Martin McTague, said the focus of the new PM should now be on stabilising the economy, delivering the promised support for small firms on energy bills and cutting National Insurance, and securing growth and prosperity in the medium and long term.

“The political turmoil at Westminster must end, and attention switch to the real world in which small businesses and the self-employed are being hammered by soaring costs, falling revenues, and diminishing availability of affordable finance,” he said.

“With recessionary pressures acute for small firms, pro-business measures will be needed to secure prosperity in the medium and long term. That includes the right tax and regulatory framework, including keeping pre-profit taxes such as Business Rates and National Insurance as low as possible.

“Policies should also support improving broadband and local road infrastructure, housebuilding, and labour supply.”

Mr McTague said soaring energy bills have been uppermost in the minds of many small-business owners in recent months.

“The promised energy support package for small business owners must be delivered swiftly, followed by a plan for what happens after the initial six months of support which takes a realistic view on the inherently vulnerable position that smaller firms find themselves in when dealing with energy suppliers,” he said.

He said over the past two years, the small-business community has shrunk by half a million and while the reversal of the hike in National Insurance is welcome, it’s a bitter blow to the directors of small companies paid through dividends to be excluded from this.

“These hard-working entrepreneurs were left out of Covid financial support and now face this tax rise, in many cases alongside a jump in Corporation Tax,” Mr McTague said.

“At a time of pressure on public finances, the new Prime Minister could take the opportunity to improve cashflow for vast numbers of small firms without a cost to taxpayers — and that is through action to tackle poor payment practices in supply chains. Late payment of invoices — often by bigger businesses to their smaller suppliers — leads to the shutdown of 50,000 businesses a year. Over the last three months more than half (54 per cent) of small firms have been the victim of late payments.

“There’s an easy win for the Government and small businesses here if ministers double down on blacklisting big business offenders from winning taxpayer-funded contracts; as well as making audit committees of big firms directly responsible for their company’s payment practices.”

Shevaun Haviland, director general of the British Chambers of Commerce (BCC), said the political and economic uncertainty of the past few months has been hugely damaging to British business confidence and must now come to an end.

“The new Prime Minister must be a steady hand on the tiller to see the economy through the challenging conditions ahead,” she said.

“This means setting out fully costed plans to deal with the big issues facing businesses; soaring energy bills, labour shortages, spiralling inflation, and climbing interest rates. 

“Firstly, the Government must provide more certainty on the energy support package for businesses and quickly communicate how the system will work from April. Firms need to know what support to expect in the medium and long term.

“Secondly, they must fix the extremely tight labour market. Without the skilled people to do the jobs businesses need, the economy will stagnate.

“Thirdly, to grow the economy, Government must set out a strategy to boost our international trade and exports.

“We need a clear long-term vision of how the new Prime Minister will deal with the challenges ahead and create the business conditions that allow firms, and the communities that rely on them, to thrive.”

Helen Dickinson, chief executive at the British Retail Consortium, said with consumer confidence at historically low levels, Mr Sunak will need to provide certainty to households and support them through the cost-of-living crisis.

“Retailers are playing their part in supporting their customers, shielding them from the worst of rising costs resulting from a weaker pound, tight labour market and war in Ukraine,” she said. “However, these efforts are threatened by the £800m bombshell of additional business rates that will hit retailers in April — a 10 per cent rise that far outstrips sales growth over the last year. To support consumers at this difficult time, government should freeze business rates and reform the broken transitional relief system, or it will be households that pay through higher prices,” Ms Dickinson said.

UKHospitality CEO Kate Nicholls said this is a critical time for hospitality businesses as they battle soaring energy costs, workforce shortages and waning consumer confidence, so stable political leadership is absolutely critical.

“Hospitality clearly displayed its ability to grow prior to the pandemic and was on the road to a strong recovery before the energy crisis hit. It can return to those levels through pragmatic decision-making that eases the acute challenges businesses are facing,” she said.

“I would encourage him [the new PM] to extend business rates relief, reform the entire business rates system in the longer term and lower the current rate of VAT.”

British Independent Retailers Association commercial director Jeff Moody said anything that will stabilise financial markets, improve consumer confidence, and will help the high street in such a vital trading period is key.

“Now we ask for the Prime Minister and his cabinet to concentrate on reducing the cost burden now with prompt support for business on energy and tax burdens but also in the long term by committing to reducing the rates burden on ‘Bricks and Mortar’ retailers to prevent further closures announcements,” he said.