Presenting what has probably been the most important Budget in recent memory, the Chancellor has been under immense pressure to provide ways of stimulating the economy.
Addressing the House of Commons on Wednesday, Rishi Sunak told MPs that he will do all that he can to protect businesses.
Responding to the Chancellor’s Budget Speech the Federation of Small Businesses (FSB) National Chairman Mike Cherry said, “This Budget will help many small firms with their final push through to September, but there is little here to aid job creation or help people return to work. Ensuring the newly self-employed can now access support marks a big step forward – we’re pleased our campaign has been heard – but directors, who appear to have been left out yet again, will be incredibly disappointed.
“Thousands of small businesses are on the brink of collapse and thousands more are suffering from low confidence as cash reserves dwindle. They will welcome both the extension of flagship support schemes that have kept them going over the hardest year they have ever faced, as well as confirmation of new support measures around taxation, employment and cash grants.
“The continuation of business rates and VAT discounts is critical, and it’s important that those in supply chains benefit from them, not just those that neatly fit the definitions of frontline retail, leisure and hospitality. The new super deduction option sounds very promising, and we look forward to further detail on the investments it will cover – it should be made accessible to the smallest firms. Confirmation of pre-announced measures like Help To Grow on management and digital skills, and Restart cash grants, are welcome, and it’s key that the very smallest firms benefit from them.
“That said, while the furlough extension is much-needed, small employers are still struggling due to high national insurance contributions and the removal of the job retention bonus. The Government should look again at these areas. Fundamentally, there was very little in the statement on job creation and reducing the cost of employment.
“The Chancellor’s commitment to ruling out tax rises until the recovery is underway is the right one. Hikes on those who can bear it the least, with modest profits and large amounts of debt, are self-defeating. The reintroduction of a small business corporation tax rate with a taper is good to see. The taper must be at a reasonable level, especially as directors of small companies have not received a penny in income support.
“It’s important that adjustments to a tax regime that already weighs substantially on the smallest firms are informed by small business expertise. A lot will hinge on the tax announcements due later in March, and the much-needed, delayed downward review of business rates.
“There is now a question of how we help small firms with substantial debt – a student loan model for repayments and support to adopt employee ownership both mark constructive ways forward.
“Maintaining the £85,000 threshold for VAT registration is positive. However, it will not resolve the bunching issue, where firms near that turnover level and stop growing. We hope policymakers will look again at the OTS’ proposal for a smoothing mechanism.
“While a visa that works for the highest-skilled is important, we would also encourage the Home Office to look closely at where skills gaps exist in the wider economy, not least our vital care sector.
“Company directors will be extremely disappointed to see that they have been left out in the cold yet again. There is still time to fix this entirely solvable gap in the business support landscape and we hope policymakers will take forward the proposals we’ve drawn up with experts in this field.
“A lot of small firms and sole traders that start to work in the summer will not be paid a penny until the autumn. The Government must reinvigorate its mission to end our late payment crisis, a mission which has been eclipsed for too long. “Support measures should continually evolve. The challenge over the summer, and leading up to the autumn statement, will be to switch focus from survival to growth. We look forward to working with policymakers on that progression.”