The Chancellor must support start-ups as rising costs threaten entrepreneurial spirit, SME expert warns – here’s five ways he can help
Emma Jones CBE calls on Rishi Sunak to support small businesses during the cost of living crisis
Emma Jones CBE is the founder and chief executive of small business network and business support provider Enterprise Nation.
She says that Chancellor Rishi Sunak must not dampen entrepreneurial spirit this year…
No one doubts the Chancellor has got some tricky decisions to make this week.
But at least he’s got plenty of experience to share when it comes to handling rising bills.
The pandemic has taught us all about the need to adapt to new circumstances and businesses have had to pivot on a monumental scale – and in some cases, it’s transformed their operations.
Digital sales boomed and for many, it took their business to a whole new level with a shiny new digitally enhanced strategy.
While for some business owners the pandemic stole their livelihoods and shattered their confidence, for others it gave them the time to dream.
In February, the Global Entrepreneurship Monitor’s UK analysis recorded the highest appetite to start a business in its history.
It found 12.6 per cent of UK working age adults expect to start a business in the next three months. That adds up to a total of three million people.
In his Mais lecture, Chancellor Rishi Sunak outlined a vision of a ‘future economy built on a new culture of enterprise’, but that strategy must include start-ups, small and micro businesses and the self-employed, or risk allowing this glorious wave of ambition to peter out.
Enterprise Nation and The Entrepreneurs Network have launched a report into the rising costs of doing business and access to finance – and it’s uncovered an uncomfortable picture.
Small firms are dealing with wage demands in response to inflation and worker shortages, supply chain disruption continues to drive up costs, and the Business Rates reliefs that helped businesses weather the impact of the pandemic are being withdrawn.
They are not protected as consumers are, by energy price caps. Some businesses, such as those in the hospitality sector will also see temporary VAT reductions to 12.5 per cent expire – and go back up to 20 per cent.
These same firms will also have to contend with a 1.25 percentage point rise in Employers’ National Insurance Contributions, a move confirmed by the Treasury at the weekend.
With the Bank of England forecasting inflation rising to over seven per cent and a 50 per cent increase in energy costs, it’s clear Rishi Sunak must act decisively next week to protect small business communities from these eyewatering inflationary pressures.
We all need a break. The Chancellor probably does too. But what he must do is make sure he doesn’t dampen down our entrepreneurial spirits this year, of all years.
There are things he can do:
1. Widen the Government’s flagship support scheme Help to Grow, so that it no longer cuts out 95 per cent of SMEs. At the moment firms must have more than five employees.
2. Reinstate and expand the New Enterprise Allowance to £100 per week for up to a year, allow recipients to access more of it upfront, and expand the eligibility of the scheme to all 23-year-olds earning less than the National Living Wage.
3. Tax reliefs designed to boost investment in start-ups such as the Seed Enterprise Investment Scheme should be expanded and streamlined.
For example, scrapping the sunset clause for EIS, SEIS and VCTs and simplify the process for Advanced Assurance would help entrepreneurs to scale and innovate.
4. Rule out a new Online Sales Tax on SMEs.
Cost of doing business aside, this would unfairly penalise small businesses and retailers that have pivoted online as a consequence of the pandemic.
5. Support the opening up of data to make it easier for small businesses to learn about the wide array of support schemes available and work with platforms that are building a ‘one stop shop’ solution for business support.
We all know the Chancellor is facing a conundrum. But it’s taken years to get to a point where we can lean into our nation’s entrepreneurial ambition and the latent expectations of a new generation entering the workplace.
If we get this right, we build a small business base that’s fit for the future – we build a true Enterprise Nation.