Unsurprisingly, the Coronavirus pandemic dominates this years budget, but what does it mean to our small independent businesses and how likely is it to cause a financial problem for them?
Caldicot Town Team have been keeping a close eye on the budget announcement, mostly because of the difference and impact that the Coronavirus may have on our town centre. Whilst a small town centre, if the virus becomes a problem in this area, over 50% of businesses in the town centre have less than 5 employees, for them to be off work will mean the difference between being open and being forced to close due to sickness.
The Government has set out a raft of plans to help support small businesses across the UK, however, unfortunately, as the Welsh Government has some devloved powers (i.e. set their own rules) this may not all be as helpful as it seems on the face of it.
The key points from the budget are around economy and lessening the impact on small and medium businesses (under 250 employees)
- The Government have offered benefits to those who need to claim statutory sick pay: it will now be available for eligible self-isolating workers, even if they don’t show symptoms, and for those caring for people with Covid-19 symptoms in their household. This doesn’t include the self-employed or low earners. You will also be able to get a sick note over the phone by calling 111. They have also scaled back the limit for claiming back to day 1 rather than from day 4.
- The Government have also offered packages to help reduce the impact for businesses, with a business rates reform: retail, leisure and hospitality businesses with a rateable value of under £51,000 will pay no business rates at all for the 2020-21 tax year. Some 700,000 small businesses which are not eligible for this relief will be offered £3,000 cash grants.
However, it is vital to point out at this point that there is no clarity at this point in time whether theses rates will be applicable to Welsh businesses, as business rates is a devolved power to Welsh Government. We are working with officers from Monmouthshire County Council and Assembly Members to find out what the Welsh Governments position is and how they will be helping businesses and if the rates will be automatically applied, or will there need to be an application process. The latter of these two options will prove time consuming for businesses at a time when they are already stretched.
- The government will refund the costs of statutory sick pay to eligible small and medium-sized businesses. Some of these businesses will also be offered loans to cover losses.
All in all, the Chancellor has confirmed that the UK Government will be spending £30 Billion pounds across the next 12 months to help prop up our economy in the UK, with more available if it is needed.
The Chancellor has also made changes to National Insurance contributions, (NICs) will only be payable on annual earnings over £9,500 in the next tax year. This is up from £8,632 this year. NICs of 12% will be payable over the new threshold, which the Treasury estimates will save the typical employee £104 a year. A typical self-employed person will get a boost of £78. The Chancellor said this will amount to a tax cut for 31 million people in the UK.
We will be keeping a close eye on statements from the Welsh Government following the UK Budget and will keep businesses informed of the changes and extended benefits to help them through the coming year.
What is frustrating however, is the timings of these reliefs. Our town centres up and down the country have been struggling for years and businesses have been closing at record rates, it does beg the question, why didn’t the UK Government and Welsh Government, offering bigger discounts and reliefs to small and medium businesses to help them through one of the roughest times in recent history.
Small businesses are suffocating under a huge amount of pressure, from portfolio based landlords who do not really care how a business survives, with high rental, high service charges and sometimes almost zero maintenance on buildings, to high business rates, increased costs in the basics of running a business, bank charges, payment processing fees and so on, to the huge battle with online retailers and out of town retail parks. Its quite obvious that for a company who owns massive warehouses who can sell millions of products will be able to do so cheaper than some small businesses can get even on a wholesale price. Our small businesses are suffering and cannot help but feel that this is all a little too late. Our Government, Both Welsh and UK have to be more proactive in saving, supporting, helping and enhancing our town centres. Before it is too late.
Of course, the Corona Virus wasn’t for-seen and is clearly having a massive impact across the world, but that aside, the problems with our town centres still and will exist for years to come, without serious interaction and counteraction we may lose them completely.