“This is a pro-small business Budget, which has delivered a high streets bonus, a series of conservative manifesto promises to small businesses, and emergency steps to support small firms through the Coronavirus outbreak.”
This was the response yesterday of Mike Cherry, the National Chairman of the Federation of Small Businesses (FSB) when the budget was announced.
Mike Cherry, FSB National Chairman
He also mentioned that “covering the cost of Statutory Sick Pay and emergency measures for the self-employed are particularly welcome. Removing the minimum income floor for those on Universal Credit will bring help to those working hard to keep their businesses going. These are vital contingencies for the UK’s 5.8 million-strong small business and self-employed community. There may need to be further steps in the weeks and months ahead.”
This means that SMEs should be receiving the help they need to deal with the possible impacts of self-isolation and school closures, and the economic challenge posed by the Coronavirus, which was also officially declared a pandemic yesterday.
The measures that have been put in place, include a £12bn plan which promised to do a number of things including:
- Firms with fewer than 250 staff will be refunded for sick pay payments for two weeks.
- The Bank of England has announced an emergency cut in interest rates from 0.75% to 025% in a bid to support the economy during the virus outbreak..
- £1bn of lending via a government-backed loan scheme, with government backing 80% of losses on bank lending.
- Business rates will be abolished altogether for this year for firms in retail, leisure and hospitality sectors with a rateable value below £51,000.
- Deferral of tax payments – a dedicated helpline will be set up for those who need a deferral period on their tax liabilities.
- Self-employed workers who are not eligible will be able to claim contributory Employment Support Allowance. This “new style” Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice from the first day of sickness, rather than the eighth day.
There was promise of extra spending on new roads, and repair of the old; spending on rail services, housing, the NHS, education and freezing of fuel and alcohol duty. There were also some key omissions. Little was said about social care, which is under huge strain, and nothing was said about IR35 apart from a vague hint about what HMRC will do. However on closer inspection of the documents IR35 will go ahead despite huge lobbying from those freelancers across many sectors including the media, IT, care etc. Also was little said about the child care sector – and that might really matter if Covid-19 reaches the predicted peak.
We’ve asked some of Bath and Somerset’s business owners for their reactions to the Budget.
In response to the Chancellor’s budget, Phil Smith, Managing Director of Business West commented, “Given the growing scale of the impact of Coronavirus on the global economy – and also its likely impact on the UK – a strong statement of intent from the Chancellor is absolutely the right thing to do”.
Phil Smith, Managing Director, Business West
“The scale of the response was impressive. If the past few weeks has been about turning on the taps to wash our hands, here was the Chancellor turning on the UK’s fiscal taps to try and avoid the worst. It also shows welcome co-ordination with the Bank of England to help provide support direct to businesses and indirectly to their workers”.
“For business his message was that this support would act as a ‘bridge’ to help cope with one-off stresses and make it through to a resumption of normality. When many businesses are feeling worried about how to cope, Rishi Sunak’s proactive firepower will be very welcome”.
“This was a big spending budget in the short, medium and long term, and although some of the measures were populist – with freezes on all alcohol duties – most of the money would be on capital expenditure: particularly on infrastructure. Much of this is very sensible. The UK has under spent on infrastructure for far too long – pursing a penny wise, pound-foolish strategy. With global borrowing so cheap it makes sense to increase our spending on transport, housing, broadband, skills and research and development – all of which have the potential to boost long-term growth”.
“This included welcome name checks for improving the A417 in Gloucestershire and the A303 near Salisbury, and new investment in roads, rail, University research and a ‘New Blue Skies funding agency’ modelled on the American ARPA. There was stress on business innovation and international trade, with new trade envoys announced for the West of England and Wales around the world”.
“However, there remains a daunting global backdrop. No one yet knows how big a shock Coronavirus will bring us. Today the ONS had already announced that growth from January to March had stalled to zero. The government’s growth projections had also been shrinking, even before Coronavirus had been taken into account. And we still face major changes in our global trading relationships, and with the EU, when the transition period ends on the 31st of December”.
“Some will therefore be nervous that this budget could be a hostage to fortune, reliant on continued benign global interest rates, a rapid return to growth, and with a needed claw back through higher taxes in two or three years’ time. A short-term boost to help the UK out of a difficult place, we now place our faith that the future will take care of itself”.
Zara Coney, of design agency Hamilton Brown, said her main positives were:
- Delighted to see support for SMEs as we deal with the uncertainty around Covid-19
- As a commuter in the South West it is great to hear about road improvements
- At the heart of Bristol’s community there is a focus on environmental and climate change therefore, I am pleased to see a real focus on plastic and fuel consumption
- Flooding is a particular issue, especially around the areas where I live in North Somerset. I am pleased to see this highlighted
- Potholes on roads across the South West are quite a problem; good to see this has a mention.
David Beaumont, regional director for the South West at Lloyds Bank Commercial Banking said, “Improved infrastructure and connectivity is so important for the South West and something that was recognised by a quarter of the region’s businesses as a top priority for today’s Budget. The Chancellor’s announcement that the A303 will receive investment among the £600billion promised for infrastructure funding will be particularly welcomed across the South West. Connecting the region to London and the South East is vital to boosting economic growth, something we look forward to once these infrastructure improvements have been made”.
Angus Hughes, Mosaic Digital
Angus Hughes, of Bath-based Mosaic Digital Consultants said, “As a small business, we were very pleased with what the chancellor has announced in his budget. We expect that the significant increase in capital spend will result in more opportunities for us and other small businesses. However we also welcome the detailed & targeted measures such as the state paying for 14 days of statutory sick pay, and of more immediate concern, some financial help to counter the threat of the Coronavirus.”
Angela Ashworth, Director, and Co-Founder of Purple Lime said, ‘The combination of these should help business owners to steer a path through what is being described as a temporary economic uncertainty.
Purple Lime Directors, Angela Ashworth and Oli Thomas.
“However the devil is always in the detail and we do not yet know the full criteria that would need to be met in each instance.
“More will follow, as will further administration for SMEs on the back of it…”
Angela shared some of what she found positive for SMEs:
- Temporary Corona virus Business Interruption Loan Scheme – crucially government will guarantee up to 80% of the loan – thus giving the bank confidence to lend
- HMRC to scale up Time to Pay – enabling you to reach mutual agreement with HMRC on a repayment plan if you need to.
- SSP – 14 days paid if the recommendation is to self isolate – SME’s will not bear the cost of this – the government will.
- For those who are already eligible for small business rates relief – a cash grant of £3000 will be available.