‘Strong recovery possible with right support’, small firms tell Chancellor

The UK’s business group has written to Chancellor Rishi Sunak outlining measures needed to enable small firms and the self-employed to bounce back from the current recession. 

In the correspondence, the body’s chairman reiterated calls for the two metre social distancing benchmark to be reduced should expert opinion allow for such a move, and the introduction of back to work vouchers to cover the costs of on-site safety adjustments as small firms reopen.   

Its new research shows that the vast majority (86 per cent) of small businesses said they’ll need to make changes to their premises in order to do so safely.

Of those that are across their respective government’s guidelines, 60 per cent said it would cost up to £1,000 to reopen in-line with the relevant guidance – more than a quarter (28 per cent) said it would cost more than £1,000. One in five (20 per cent) small firms that have remained closed during the lockdown admitted they cannot reopen while current guidance is in place. 

“Our hope is that the gradual unwinding of the furlough scheme coincides with a gradual return of more normal levels of economic activity," said FSB chairman Mike Cherry. 

“But the job market has already taken a hit. To ensure opportunities exist for those who’ve lost work, or are looking for the first time, the Chancellor will need to take an ambitious and holistic approach to employment interventions.” 

To protect livelihoods as the Job Retention Scheme (JRS) is gradually wound down, the FSB recommended that the Treasury consider: 

• Cutting employers’ National Insurance Contributions (NICs), or uprating the targeted Employment Allowance, while extending NICs holidays in order to reduce the high fixed costs of employment and encourage job creation.  
• Assisting small firms with apprenticeship training and wage costs as part of an apprenticeship guarantee for those who’ve had a qualification path disrupted or would like to embark on one in the near future, alongside a large-scale employment programme for young people akin to the Future Jobs Fund. 
• A full statutory sick pay (SSP) rebate, or alternative mechanism, for all those who need to self-isolate over the coming weeks as the track and trace programme is rolled out, or experience secondary health conditions after isolating in the past.   

Moreover, the FSB's letter warns that “revenue has collapsed” among small businesses, with FSB calling on the Chancellor to shore-up cash flow, balance sheets and investment by ensuring discretionary grants reach those who have fallen through the cracks of  support schemes; taking a student loan-style approach to state-backed emergency loans for small businesses; and, widening access to R&D tax credits and introducing digital vouchers to encourage new-to-firm, not just new-to-market, innovation. 

The FSB is also asking for a temporary reduction in VAT and other measures to jump-start the economy, as well as the suspension or delay of reforms to IR35 and the introduction of the reverse VAT charge in the construction sector. 

“Millions of small firms and sole traders have been helped by emergency support mechanisms but hundreds of thousands have not,” Mr Cherry said.

“As we look to recover, the Chancellor should ensure that those who have fallen through the gaps are not punished further with tax rises or exclusion from new stimulus measures.”