In summary, here are the main points delivered by Chancellor Rishi Sunak today in his first ever Budget in the House of Commons and how it may affect your small business, especially now, in the light of the Coronavirus.
1: INTEREST RATES CUT
The Bank of England has announced an emergency cut in interest rates to shore up the economy amid the coronavirus outbreak. Policymakers reduced rates from 0.75% to 0.25%, taking borrowing costs back down to the lowest level in history.
The Bank said it would also free up billions of pounds of extra lending power to help banks support firms.
2: STATUTORY SICK PAY
Statutory Sick Pay (SSP) will be paid to all those who choose to self-isolate, even if they don’t have symptoms. Sick notes will be available by contacting NHS 111.
Sunak also pledges £2bn of sick-pay rebates for up to 2 million small businesses with fewer than 250 employees. Helping smaller firms pay sick pay of up to 2 weeks knowing they can get these funds refunded.
Contributory employment and support allowance (ESA) will be claimable from day one, rather than day eight. The minimum income floor for universal credit will be removed. The requirement to physically attend a job centre will be removed – everything can be done on the phone and online.
3: SMALL BUSINESS SUPPORT
Small firms will be able to access ‘Business Interruption’ loans of up to £1.2 m.
Any company eligible for small business rates relief will be allowed a £3,000 cash grant – a £2 bn injection for 700,000 small businesses.
Clearly, the coronavirus has make small businesses extremely anxious about the possible impact of cashflow difficulties ad, the chancellor has tried to stem this worry. The small business package looks, on the surface, to be comprehensive enough to tackle this issue, but we wait to find out a bit more as the small print will be important.
4: HELP FOR THE HOSPITALITY INDUSTRY
Business rates abolished for firms in the retail, leisure and hospitality sectors with a rateable value below £51k.
Another nod towards those businesses that will suffer the most if the coronavirus takes the same pattern as other countries.
UK SME Data and Statistics
Small businesses account for 99.3% of all private sector businesses in the UK, according to the Federation of Small Businesses (FSB). More than 99% of the 5.9 million private businesses are small or medium sized (SMEs).
SMEs are defined as businesses with fewer than 250 employees and account for 60% all private sector jobs in the UK, at total of 16.6 million making SMEs crucial to the UK’s economy and their contribution is increasing every year.
The South East are above the UK average for the highest ratio of SMEs with London boasting the highest. This means, roughly a third of all UK businesses are located in London or the South East.
According to a monthly survey of businesses conducted between Feb 2016 and Jan 2018 by ‘Factworks’, attracting customers is the biggest challenge for UK SMEs with 79% of businesses surveyed in 2018 listing it as their biggest concern. Of course, this isn’t a new challenge for businesses but the nature of attracting customers has changed drastically over the past few decades and it’s clear many businesses are still struggling to make the most of new opportunities and overcome new challenges.
Unsurprisingly, ‘retaining and recruiting skilled employees’ is also highlighted as a challenge for SMEs. A recent survey of 1000 SMEs has found significant regional disparities in recruiting and retaining skilled staff, with London a lonely outlier.
This uneven distribution of talent impacts businesses within the South East and Essex and it can take months to find suitable candidates with many SMEs now relying heavily on a temporary workforce to plug gaps.
If you would like some advice on the key challenges facing your business. Or would like us to help you recruit fresh talent for your business, then get in touch with our Director, David Noble today on 01268 762430.