As a business person of 30 years standing myself, I have dedicated much of my time since being in elected as an MP to the interests of SMEs. In my role as Co-Chair of the APPG on Fair Business Banking I lobbied the Treasury strongly for grants, which came in the form of:
- Business Rates Grants and holidays
- Job Retention Scheme
- VAT reduction for hospitality
- Self-Employed Income Support Scheme
- Subsidised Coronavirus Business Interruption and Bounce Back Loans
- PAYE and VAT tax deferrals
- increased generosity of the Universal Credit system through the temporarily relaxation of the minimum income floor and the increase of £20 a week from 6 April 2020.
I very much welcome the recent announcement of an additional £4.6bn in business rates and discretionary grants of up to £9,000 per business in addition to the £3,000 per month that is provided for businesses that are required to close due to the Covid crisis. Links to apply for grants are included at the bottom of this email.
I have also championed the cause of keeping the economy open wherever possible as this is the most effective way of allowing businesses to survive this recession, who can then thrive when the economy fully and finally reopens, which I very much hope will be by April this year.
The UK business support package now totals around £300bn and is one of the most generous in international comparisons. According to research by Bruegel, additional government spending (including support for SMEs and foregone revenues was the joint 2nd highest amongst the countries they analysed https://www.bruegel.org/publications/datasets/covid-national-dataset/. The vast majority of businesses have access to some or all of the above schemes, so I don’t accept that 3 million business have been excluded. However, the Treasury Select Committee https://publications.parliament.uk/pa/cm5801/cmselect/cmtreasy/454/45405.htm did identify a number of sectors who may have received lower levels of support than others:
- Those with profits of over £50k per annum: The Institute for Fiscal Studies has estimated that 225,000 individuals will be ineligible for support under the SEISS because their profits from self-employment were more than £50,000 per year. Cliff edges always create unfairness either side of the line, but you must have a cut off somewhere and I believe it would be wrong to expect taxpayers to support many of this cohort who may have accumulated significant wealth/assets.
- Limited company directors: IPSE Association of Independent Professionals and the Self-Employed stated that there are around 710,000 limited company directors who are getting little support. Limited company directors can furlough themselves and still carry out legal and administrative duties associated with running a company. I am aware that many limited company directors had paid themselves a very low basic salary and taken the rest as monthly dividends. My own accountant’s advice was that this was inappropriate and the HMRC required directors to take salary through the PAYE system and only distribute any remaining profits as dividends.
- Freelancers: the committee identified around 780,000 people in this group, but many earned less than half of their income from self-employment and employers could choose to keep them on the payroll.
- New self-employed: ONS data indicates that 3 per cent of all self-employed in the UK have become self-employed since April 2019 which, roughly estimated, suggests that around 150,000 newly self-employed are unlikely to be eligible for support under the SEISS. As you can imagine, it is extremely difficult and potentially unfair to taxpayers who support these schemes to ask them to replace income that is difficult to predict and assess.
Of course, I do believe we should keep the need for support under consideration and look at extension of the business rates holiday and VAT reductions.
How to apply for grants in Thirsk and Malton:
- Ryedale District Council https://www.ryedale.gov.uk/covid-19-2020/support-for-business.html
- Hambleton District Council: https://www.hambleton.gov.uk/grants-funding/grants/1
- Scarborough Borough https://www.scarborough.gov.uk/node/8516