Calls for government to address rising pressures faced by small businesses

It’s safe to say that the UK’s smaller sized businesses have been facing a great deal of pressure in recent times, with tax rate increases and continuing rising costs.

Those experiencing these difficulties won’t be surprised to learn that a new report has found that small businesses across the UK are now operating under pressures comparable to (and in some cases exceeding) those experienced during the Covid-19 pandemic.

SME key pressures

Small businesses are the backbone of local economies and high streets and account for 99.8% of all UK businesses.

However, evidence from the Business and Trade Committee shows that many of these small firms that the country relies on are now operating with little financial resilience and limited capacity to absorb further shocks.

The report highlighted several key pressures that are damaging small firms:

• Late payment
• High street decline
• Administrative and tax burdens
• Recent policy changes
• Energy costs
• Crime

Calls for government action to help SMEs

The Committee concluded that the current pressures on small businesses are cumulative, structural and self-reinforcing.

Without action, these conditions risk accelerating business closures, hollowing out high streets and undermining the Government’s growth objectives.

Rt Hon Liam Byrne MP, Chair of the Business and Trade Committee, said, “High streets do not die by accident. If the Government is serious about growth, it must set out a more coherent and ambitious plan for the businesses that make up so much of the UK economy.”

The Business and Trade Committee advises that the government:

1. Ends the late payment crisis by introducing stronger, enforceable measures to prevent late payment.
2. Increases SME access to public procurement.
3. Reforms the VAT system to remove growth-discouraging cliff edges (including reviewing the VAT registration threshold and reducing complexity that penalises firms).
4. Replaces business rates with a fairer system that reflects a firm’s ability to pay.
5. Simplifies and improves access to the skills system for SMEs, ensuring training and apprenticeship provision is designed around the needs of smaller employers and supports productivity growth.
6. Introduces targeted energy support for SMEs.
7. Provides clear national leadership on business crime, ensuring that crime against business is treated as an economic priority.
8. Equips local authorities to regenerate high streets.
9. Creates a coherent national framework for SME business support.
10. Improves SME data and cross-Whitehall coordination.

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