FSB calls for government to intervene before support ends on Thursday
The Federation of Small Businesses (FSB) has called on the government to update deadlines for support schemes that end before the proposed lifting of England’s lockdown.
The business group has urged the Treasury to update timeframes for business support measures, including full furlough, business rates exemptions and VAT deferrals, which are set to end on Thursday 1 July, 18 days before the potential lifting of trading restrictions in England.
Since delaying the unlock date, the government has announced three measures to help firms: extensions to an eviction moratorium and suspension of wrongful trading rules for directors, as well as renewed efforts to release around £1bn of restart cash grants held up in local authorities.
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However, the FSB has highlighted that the government has not announced any fresh funding for firms.
On Thursday, the minimum five per cent of wage costs that employers contribute for furloughed staff through national insurance and pension contributions will increase to 14 per cent as the government begins to wind down the job retention scheme.
Firms will also have to start paying any VAT deferred from last year, and those in the retail, leisure and hospitality sectors will lose business rates exemptions.
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On 1 July a new VAT One Stop Shop (OSS) for small UK exporters to the EU will launch and there will be the full wind-down of import easements installed for six months after the EU-UK transition period ended.
FSB’s recommendations come as repayments on more than £45bn of emergency bounce back loans start to fall due.
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“Last year the government told us that it would do “whatever it takes” to help the 5.9 million sole traders and small businesses on which our recovery will depend,” said Mike Cherry, national chairman at FSB.
“The Treasury committed to evolving support measures to ensure they were adequate in the face of what firms were up against. But now – after a crushing delay to the reopening road map – the new support measures are limited to those which do not cost the Treasury a penny.
“As a small business owner, I understand the importance of being careful with what I spend. But failing to review support deadlines that were designed with a June unlock date in mind is a false economy.
“Unless the government acts now, it risks a serious economic flashpoint this Thursday – a moment at which financial support starts to wind down, further trade changes take effect and repayments on emergency loans start to fall due.
“As well as revising support measure deadlines and extending access to, and awareness of, the SME Brexit support fund, we’re recommending the government look again at our proposal to give those struggling with emergency loans the option to swap that debt for employee equity.”
