One in 20 small firms are at risk

CALL FOR MORE GOVERNMENT SUPPORT

ABOUT one in 20 small businesses in the East Midlands could go under this year unless the government does more to protect them, representatives say.

The Federation of Small Businesses (FSB) said nine months of pandemic restrictions have already pushed thousands under.

Compounded by new restrictions on trade with the EU, fears are growing that more will follow.

A federation members survey suggests more than 17,500 small firms in the region could be lost in the coming months.

That is out of a total figure of 397,000 the Department for Business, Energy and Industrial Strategy (BEIS) said were operating in the region in October.

The figure at risk does not reflect the threat of closure faced by those hoping to survive by freezing operations, cutting headcount or taking on significant debt.

FSB East Midlands policy chairman Clare Elsby said: “We need to adequately support businesses which are feeling the big pinch, particularly those in the East Midlands which missed out on a fair proportion of local discretionary grants and which have seen a massive footfall reduction in the run-up to the Golden Quarter (around Christmas) and those which rely on a thriving night-time economy.

“The fear of at least 17,500 East Midlands businesses folding, based on this FSB data, is extremely worrying.

“Company directors, the newly self-employed, those in supply chains and those without commercial premises are still being left out in the cold. We’ve published a fivepoint plan to address gaps in the support and we look forward to the

Treasury embracing it. Action in March will be too late to stem closures.”

The federation’s quarterly Small Business Index – launched in the wake of the financial crash – showed confidence at its second lowest in the report’s 10-year history. One in five firms cut jobs in the three months to December and one in seven expects to do so this quarter.

The BEIS estimates 16.8 million people work in smaller firms across the UK.

The number expecting profits to fall in the next three months is also at an all-time high, with exporters also feeling the strain following the last minute EU-UK trade deal.

Cabinet Office minister Michael Gove has warned businesses and hauliers there was likely to be “significant additional disruption” at the UK border as a result of Brexit customs changes in the coming weeks.

According to the survey, almost half of exporters expect international sales to drop this quarter, up from 33% this time last year.

It also said the vast majority of small business owners do not expect their performance to improve over the next three months.

FSB regional chairman Les Phillimore said: “The development of business support measures has not kept pace with intensifying restrictions. As a result, we risk losing tens of thousands of great, ultimately viable small businesses this year, at huge cost to local communities and individual livelihoods. A record number say they plan to close over the next 12 months and they were saying that even before news of the latest lockdown.

“At the outset of the first national lockdown, the government was bold. The support mechanisms put in place weren’t perfect, but they were an exceptionally good starting point. That’s why it’s so disappointing that it’s met this second lockdown with a whimper.

“There are meaningful lifelines for retail, leisure and hospitality businesses, which are very welcome as far as they go. But this government needs to realise the small business community is much bigger than these three sectors.

“We also have to look again at how we treat emergency debt facilities over the coming months.

“Many of those who have borrowed significantly have done so in order to innovate. It would be a shame to lose the top businesses of tomorrow because of a failure to extend grace periods today.

“All the while our exporters are trying to get across what a new EU-UK trade agreement means for them without the cash they need to make adjustments. Direct funding to help them manage new obligations in the form of transition vouchers is urgently needed.”

Chancellor Rishi Sunak said about 600,000 retail, hospitality and leisure sites would be able to claim a one-off grant of up to £9,000.

We risk losing tens of thousands of great, ultimately viable small businesses this year, at huge cost to local communities and individual livelihoods

Les Phillimore, FSB regional chairman