The Federation of Small Businesses has written to Rishi Sunak outlining measures needed to enable small firms and the self-employed to bounce back from the current recession.
The FSB says that mechanisms to help the small business community have been central to the government’s programme of emergency business support, and their letter calls for them to have a similar place in recovery plans.
The business group’s research has found that of those that are across their respective government’s guidelines, 60% say it would cost up to £1,000 to reopen in-line with the relevant guidance – more than a quarter (28%) say it would cost more than £1,000. One in five (20%) small firms that have remained closed during the lockdown say they cannot reopen while current guidance is in place.
FSB National Chairman Mike Cherry, said, “The fundamental question facing small businesses today is: can I open in a way that’s both commercially viable and safe?
“Among those for whom the answer is yes, the majority will face additional costs as they adjust their operations. The Government should step in with back to work vouchers so firms doing the right thing can recover this expenditure.
“Our hope is that the gradual unwinding of the furlough scheme coincides with a gradual return of more normal levels of economic activity.
“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.”
The letter warns that ‘revenue has collapsed’ among small businesses, with the FSB calling on the Chancellor to shore-up cashflow, balance sheets and investment by:
- Ensuring discretionary grants reach those who have fallen through the cracks of support schemes – such as suppliers to the retail, leisure and hospitality sectors, company directors, and the newly self-employed – and making sure “that any lack of support is reflected in future policy development.”
- Taking a student loan-style approach to state-backed emergency loans for small businesses, allowing firms to start repayments once they are making a profit.
- Widening access to R&D tax credits and introducing digital vouchers to encourage new-to-firm, not just new-to-market, innovation.
- Considering a temporary reduction in VAT and other measures to jump-start the economy.
- Suspending or delaying reforms to IR35 and the introduction of the reverse VAT charge in the construction sector, set to take effect in April and March respectively.
Cherry added, “Millions of small firms and sole traders have been helped by emergency support mechanisms but hundreds of thousands have not.
“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.
“Many have secured bounce back and interruption loans to cover fixed costs as revenue disappeared through no fault of their own. What we have to avoid is a situation where small firms have one eye on repayments so hold fire on investment and hiring at a moment when we need them most. A guarantee that they wouldn’t have to start repayments until they’re turning a profit would allow them to crack on without fear.”
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