Small businesses urge ‘radical interventions’ to address slump in confidence
Small businesses are urging the Chancellor of the Exchequer to bring forward radical interventions to address a slump in small business confidence.
Sajid Javid has announced he plans to hold a budget on 6 November, a week after the scheduled Brexit date, with the FSB calling for radical interventions to an unprecedented long-term slump in confidence, slowing economic growth and a widening trade deficit.
Writing to the Chancellor, the group demanded a major reduction in business rates bills for small firms, as thousands struggle to stay afloat amid spiralling operating costs.
The FSB has recommended that the retail discount – which allows small retailers with rateable values of up to £51,000 to claim a 33 per cent discount on their rates bills – be increased to at least 50 per cent, made permanent and extended to small firms operating in other sectors, including manufacturing.
It is also calling for the threshold for small business rates relief to be increased from £12,000 to at least £30,000.
“Small businesses have been left hamstrung by uncertainty for the past three years. We need to see the Chancellor step-up to the mark next month with measures that will reinject optimism into the small business community and enable growth. Otherwise, we’re in for a very bleak winter,” said FSB chairman Mike Cherry.
The FSB’s autumn budget submission also highlighted the increased strain that rising employment costs are putting on small firms.
According to the group, following April’s increase in minimum wage rates and employer pension contributions, the number of people in employment fell by 56,000 last quarter.
In order to reverse the slump, the FSB is recommending that the £3,000 discount on national insurance bills available to small firms through the employment allowance be increased each time a new member of staff is taken on, with an additional £1,000 made available for every new recruit until a £13,000 annual cap is reached.
“While the helicopter view of our employment market shows it has held-up relatively well over the past few years – as firms increased headcounts rather than invested for the long-term – small employers are now under significant costs pressures, with little help from government when it comes to tackling low pay,” said Mr Cherry.
Elsewhere, the group is calling for direct financial assistance for small firms impacted by Brexit uncertainty in the form of £3,000 export vouchers, which could be used to claim back the costs of expert advice.
“Cash is always king for small firms. If we hit a serious bout of Brexit-linked turbulence in the months ahead, the banks and HMRC will need to do all they can to support those impacted by cash flow issues. The damage of Brexit uncertainty has already been done,” Mr Cherry said.
“Small business owners have been left unable to plan, and are finding it increasingly difficult to retain EU clients and staff. Direct financial assistance is now urgently needed for those that have been directly affected by the three-year impasse.”
More widely, he urged the government to bring the UK late payment crisis to an end.
“We’ve fought hard for progress, but there’s a lot more work to do to put our endemic poor payment culture to bed for good. This Chancellor should lead the charge and set out his plans for doing so on 6 November.”