By Martin McTague, National Vice Chair, Policy & Advocacy, FSB
With the rollout of vaccines, there’s hope that the end of the pandemic may finally
be in sight. But small firms still need support to help them reach that point.
I find it hard to think of a good analogy for the turmoil of the past year and the disruption and hardship brought by the pandemic – to individuals, families, everyday life, small businesses and the economy.
But if we think of it on the business side as a marathon – albeit one we’ve had to do without training and planning –we’re hopefully, with the rollout of the vaccines,entering the final couple of miles. While that is in many ways reason for optimism, I worry that, without significant new support, those last couple of miles could be the most gruelling of all.
This isn’t looking like a clear run. While we are all cheering each other on, all sorts of obstacles are being thrown in our way, which makes it harder to reach the finish line. VAT bills, the start of paying back emergency loans, the end of existing Covid-19 business support schemes and countless other cliff-edge cost pressures are biting – just when many small business owners and the self-employed are flat out trying to make it through to the end of this immediate crisis and the beginning of the recovery.
At government level, much has been done to get a lot of small firms through so far. Billions have been spent, and schemes that would normally have taken years to establish were set up in weeks. Not everyone has been helped, and forgotten groups such as the newly self-employed and directors of limited companies have been left high and dry. Addressing this must be a priority for the UK Government.
After all the investment in existing support schemes, it seems illogical to deny a final burst of support for what we hope is the last stretch, having gone so far to keep so many in the running.
The lessons of the financial crash of more than a decade ago are clear – the recovery was driven by small businesses and the self-employed. With the right support, that can happen again.
With unemployment rising, job creation will be key. Smaller employers can be part of that if a) their businesses survive, and b) there’s an easing of tax disincentives to employment. A reduction in employer National Insurance contributions would make it more affordable to retain and recruit staff.
Many have had to take out emergency loans, and repayments are becoming due. Action to help small businesses deal with this debt will be needed, including the possibility of an income contingent repayment system – pay as you grow, not pay-back by having to cut back.
Tourism and hospitality have been hit hard, and VAT reduction should be extended in these sectors. Their supply chains – and those of nonessential retail – should be covered by a final furlong of support through grants and rates relief. None of this is about begging – it’s about getting otherwise thriving businesses through enforced restrictions.
In a marathon, it’s only humane to give an exhausted runner a bottle of water. It’s also much preferable to the runner dropping out of the race due to dehydration. Small businesses can reach the finish line of this crisis – help us to get there and we’ll continue to be economic and community champions on the other side.