Small businesses in need of a boost
Though we hear frequently hear instant reaction by big business, it’s crucial to remember that of the 5,867,800 businesses in the UK, 5,824,500 are considered to be small, in that they employ fewer than 50 people. That’s over 99 percent of all businesses in this country.
Given that small business accounts for the employment and livelihoods of over 13 million people and over £1.5 trillion, their importance to the UK economy is crucial.
Small businesses will therefore have been especially interested in the contacts of the autumn budget statement by Rishi Sunak.
Following a pandemic caused by a virus no-one had even heard of until early 2020, which caused widespread shutdown of normal life, many small businesses have been affected. They were looking for a boost.
Unfortunately, what they heard will, in large part have left them decidedly underwhelmed.
The biggest issue confronting businesses wanting to get back to normal is in paying bills that cannot be ignored. This includes business rates.
This is within the gift of government and Sunak’s announcement of a freeze in what’s known as the business rates multiplier for 2022/23, as well as 50 percent relief for the retail, hospitality and leisure sectors over the same period (to a maximum of £110,000), will be welcome.
Equally, the fact that such businesses can claim relief for property improvements and green technology in 2023/24 is a step in the right direction.
Whether this is enough to save many small businesses – particularly high street retailers – already struggling before the pandemic remains to be seen.
Many had hoped for the sort of radical reform of business rates that has been called for by commentators in recent years.
Equally, the fact that the government extended the £1 million level of the annual investment allowance until 31 March 2023, which assists businesses wishing to invest in plant and machinery, came as good news.
Sensible steps in the right direction
However, like business rates, it’s widely seen as a form of tinkering rather than creation of the dynamic entrepreneurial environment that was promised post-Brexit.
That Sunak explicitly expressed his desire to see more ‘start-up’ companies is no bad thing. The ‘Help to Grow’ scheme is certainly worthy but, it should be stressed, not as widespread as would be hoped.
Small businesses, with a multitude of other pressures – survival frequently being the greatest – find there are too many obstacles to making applications.
Correspondingly, Sunak’s commitment to making the country a “science and technology superpower” by investing in a more innovative, high-skill economy seems absolutely sensible.
However, rhetoric is the easy bit, making it happen is the hard bit. Many believe, the state of public finances notwithstanding, Sunak didn’t go far enough in showing support through available funds for innovation.
Though the £30 billion offered for new green industries as part of achieving the government’s innovation agenda is undoubtedly a major step in the right direction of achieving the strategy of ‘net zero’ published a couple of weeks ago, there’s a sense that more could have been announced to fulfil this ambition.
Good but not radical
Overall, therefore, last week’s budget was good in so far as doing enough to assist business but a missed opportunity to be really radical.
All businesses are facing difficult ‘headwinds’ in terms of inflation caused by supply-chain issues, rising wages and increased costs for fuel.
For many businesses, Rishi Sunak will have ensured that many small businesses remain in a form of ‘life support’ following the pandemic. For all our sakes, we hope as many as possible survive and, as well as newcomers, continue to prosper. This will achieve the economic recovery that’s in our collective interest.
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