Iain Dale 7pm - 10pm
Small and medium-sized enterprises, the bedrock of UK business. Are they the forgotten heroes?
9 June 2023, 08:14
The Johnson Administration took office in December 2019, with a significant overall majority of 80 seats.
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To say that this fresh-faced government was full of expectations, especially when charged with delivering Brexkt, despite the belligerent efforts by the opposition and many Tory MPs to block its progress, was an understatement.
Then the pandemic all but economically closed the UK down, by 20th March 2020.
Who would have believed that come March 2020 Covid 19 would have ruthlessly savaged the UK economy in the manner it did.
It cost the Exchequer £400 billion in terms of increased Government borrowing and quantitative easing, including £70 billion to furlough 11.5 million from our workforce, easing back to 2.4 million beneficiaries by October 2020.
Also included was an £80 billion government-backed loan facility to keep the country afloat and at least £4 billion on PPE. It is thought that 9% of the furloughing scheme was fraudulently claimed, with the Government making very heavy weather of reclaiming these funds.
The FTSE 100 fell to 5190 on 20th March 2020 – down 29% in a week. That was the financial damage incurred, which by any standards, was humungous.
- David Buik & Michael Wilson, two of the most respected commentators in the world of Money and Business come together for a weekly podcast – Money!
Then there was the small matter of about 1.5 million people, who were developing their own enterprises, who did not qualify for furloughing.
Why? The owners of these small, but aspiring businesses had chosen to pay themselves dividends rather than take a salary. Many of them did not earn a penny for nearly a year due to Covid restrictions.
The damage that this pandemic inflicted on hospitality, including hotels, pubs and wine bars as well as the retailers on the high street was horrendous. Many of these operations have been forced to close and more will follow. Hordes of overseas workers returned home for two reasons; Covid and Brexit.
Many Europeans were either made to feel unwelcome or thought regulatory requirements to remain in the UK were too draconian. The Government had very poor relationships with the EU.
Many believe that France’s and Germany’s decision to suspend the use of the AstraZeneca vaccine was deliberate in response to the EU’S debilitating relationship with the UK Government. That’s how bad it was!
The pandemic has changed the entire culture of the UK.
The public has become angry and resentful.
The Government is extremely unpopular, even though many have become extremely comfortable working from home.
The supply chain became an inflationary issue as did quantitative easing and of course, the Ukraine war exacerbated global inflation dramatically.
UK inflation hit 11% and it is only stubbornly dissipating. This has led to higher interest rates – twelve rises in two years to 4.5%, with 5.5% not out of the question by November 2023.
Disposable income has fallen and SMES in some places are struggling. Public sector strikes for more wages have become rampant. The NHS is on its knees and the general outlook is not very appetising.
It may be flippant to say it, but Government, whether it be fair or not, is that unpopular, it could well be blamed if Manchester City lose the ‘Champion Leagues’ final! That is how bad the perception of their performance is!
It is accepted that the Government is not a bottomless pit of money and that there are fiscal restraints. However, Britain has always been known as a nation of shopkeepers. Small and medium-sized companies have always been the bedrock of our economic success and they may have some right to bemoan the fact that they are the forgotten heroes of our society.
The Government has put in place tax breaks for capital allowances and the Chancellor and Michael Gove are encouraging ‘levelling up’ around the country.
But this is not enough.
The Government needs to ease up on the bureaucracy for companies that want to trade with Europe with less draconian paperwork, as well as working closer with the EU, regarding the mutually beneficial easing of tariffs. The Northern Ireland Protocol agreement, if it reaches the statute book, will certainly help to achieve that goal.
SMES need some tender loving care from the Government.
They need help with business rates. Perhaps the reintroduction of the VAT reduction beyond April 2022 for the hospitality sector would help.
Further consideration to extend the interest-free period for bounce-back loans beyond the initial 12 months period could be extended. Whilst it would be tempting to write these loans off completely.
However, I doubt the political environment would tolerate given the scale of abuse that has already been revealed. There is also a strong need to rescind the tourist tax, which is causing unnecessary anxiety to retail.
There has been some good news on the IPO front for London this week, with We Soda and CAB Payments announcing their forthcoming listings in London.
Finally, SMES are so important to the country’s heritage and prosperity. They should not have to cry from the wilderness!