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06 August 2019

Small firms call for Emergency Brexit Budget, urging Government to ‘get serious’ about no-deal planning

  • Federation of Small Businesses (FSB) outlines recommendations for a pre-31 October Budget to Chancellor
  • Calls for cuts to Employer National Insurance Contributions (NICs) and Value Added Tax (VAT), an enhanced Employment Allowance, HMRC leniency, supply chain protections, Brexit vouchers and a delay to IR35 changes
  • Supports prioritisation of business rates reduction over cuts to corporation tax

The UK’s largest business group is urging Sajid Javid to produce an Emergency Budget aimed at supporting small firms hampered by a struggling pound, weak economic growth and the prospect of a chaotic no-deal Brexit on 31 October.

The Government has set aside around £6 billion for no-deal preparations, with only £108 million dedicated to supporting the small businesses that make-up 99% of the economy.

To avoid a shock to the jobs market, FSB is calling for an Emergency Budget to include a blanket cut to Employer NICs. A reduction from 13.8% to 12% at a cost of £11 billion would help small employers to manage the surge in staffing costs which has taken place over the last four years.

The group also recommends an uprating of the £3,000 Employment Allowance following a decision to target the relief at the small firms that need it most.  

Elsewhere, FSB is calling for HMRC to urgently extend the flexible payment plans and deadline leniency reserved for firms in financial distress to the wider small business and self-employed community, urging it to implement and communicate the move imminently. The group argues that doing so will allow small firms time to sure­-up balance sheets and prepare for potential changes to trading arrangements and economic conditions.

Banks should also be prepared to take a lenient approach to requests for overdrafts and fresh finance in the coming months, according to FSB.   

Other recommendations include reducing the 20% VAT rate – charged indiscriminately on almost all goods and services – and a return to increases to the VAT turnover threshold to encourage business growth. The threshold is currently frozen at £85,000, following discussions between FSB and the previous Chancellor.

Having secured significant measures aimed at ending the UK’s late payment crisis, FSB is calling on government to make clear that it will not support corporations that squeeze suppliers in the event of an economic slowdown or unfairly burden them with the knock-on costs of a chaotic no-deal.  

For small businesses particularly affected by the prospect of a no deal Brexit in less than three months’ time – such as those that trade exclusively with one European market – FSB is calling for the provision of Brexit vouchers worth up to £3,000 to assist with planning for the future, accessing new markets, retraining staff and retooling. It states that other specific interventions to support small business exporters should also be considered.  

The new asks sit alongside recommendations put directly by FSB to the Prime Minister Boris Johnson regarding business rates, employment and infrastructure. They include: extending the two-year 33% rates discount enjoyed by small retailers with rateable values of up to £51,000 to all sectors, including manufacturing; introducing a rebate for Statuary Sick Pay; and the introduction of an accelerated programme aimed at giving all small firms good access to high speed broadband.

FSB Policy & Advocacy Chairman Martin McTague said: ­“With the UK set to leave the EU on 31 October, we need an Emergency Budget before Brexit happens. It’s time for this government to get serious about planning, and preparing the economy.

“Advertising campaigns and small-scale measures focused on a few exporters won’t cut it. Cash is king for small firms, so we urgently need measures that will allow them to sure-up balance sheets, keep hiring, and help them prepare for an uncertain future.

“Small firms don’t have endless staff equipped to prepare for countless different Brexit scenarios. Cutting Employer NICs and VAT, expanding Time to Pay and providing specific support to the most affected through vouchers is the best way to insulate jobs and growth from any economic side-effects of a sudden no-deal Brexit.  

“We’ve been dogged by disappointing economic growth for years now. That’s why we need interventions on the domestic front. Making business rates fairer, supporting those struggling with employment costs, and investing in infrastructure would give many small firms a new lease of life.

“The Government would do well to remember that the economy only thrives when small businesses do.”