I am the Federation of Small Businesses (FSB) development manager for Hampshire, Dorset and Isle of Wight and here is my response to the news that the Government has launched new support measures to mitigate the impacts of rising energy bills for households and the Bank of England’s Monetary Policy Committee has raised the base rate to 0.5%.
A lot of small business owners will be feeling a double hit today. First off, exclusion from the Chancellor’s statement regarding support for those struggling with energy bills. And second, a rate rise that will increase repayments on a good deal of personal and professional debt, adding to existing cashflow woes just as tax rises loom.
The Government is right to help households with rising costs. It should be helping the smallest firms too, which face many of the same challenges as consumers in the energy market, but without the same protections. The household rebate should be matched by an equivalent business rates rebate, to help the smallest firms which have been weathering these price increases for months already, and which desperately need a measure of protection from the energy crisis storm.
Planned support via the council tax system will leave struggling community cafes, convenience stores and restaurants wondering, where is the support via the business rates system? Equally, where is the help to spread bills for the small businesses that create jobs and ensure growth in local economies? These are the very businesses which will be key to the success of the levelling-up agenda, yet the day after it was launched they’ve been left out in the cold. With regards to the discretionary funding available to local authorities, we’d urge a rethink so authorities could also consider the needs of the local small firms which protect the livelihoods in their communities. Giving local authorities more autonomy in this area would also be in-keeping with the levelling-up proposals.
The interest rise announced today will pile yet more stress on small business owners struggling with debt. The hope, against a backdrop of spiralling utility bills and surging inflation in the round, is that it goes some way to putting the brakes on rising prices.
“The back-to-back rate increases will mean more pain for all those with personal and professional debt that carries a floating rate. Where emergency loans are concerned, repayments on bounce-back loans are fixed, but anyone with a coronavirus interruption loan could be significantly impacted by this move.
To minimise the risk of sending viable businesses to the wall, the Government should expand Pay As You Grow to cover CBILS as well as bounce-backs. We’d also encourage policymakers to look again at our proposals to enable those with emergency debt who are just about clinging on to convert bounce back loans into employee equity stakes, thereby alleviating pressures on small firms and spurring productivity.
On top of all the struggles that small firms are facing, the Government is set to impose a sharp rise in National Insurance contributions and dividend taxation, hitting everyone who works for a living, and all businesses regardless of their current profitability. It’s not too late for a change in course – but it must come sooner rather than later.
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