The British Chambers of Commerce has proposed the government implement ‘Covid-style’ grants for SMEs as they fear the worst amid Britain’s cost of living crisis. Small businesses form the backbone of Britain’s economy, and rising levels of inflation are taking a toll on small firms who are struggling to stay afloat in economic uncertainty.
Small businesses are now facing a “tsunami of costs”, the British Chambers of Commerce (BCC) has warned, and are calling for the government to provide the same support given to SMEs during the coronavirus pandemic. Director general of the BCC, Shevaun Haviland, has put forward a letter to ministers urging them to provide grants to struggling SMEs so they can sustain their businesses during these challenging times.
SMEs would need around £5000 each to afford energy bills over the winter. With around 4.5 million SMEs in the UK, this would require £23billion of government support. Shevaun Haviland said: “Using the system that was put in place during Covid, for example grants paid by local authorities, would help those at the smaller end who are really struggling to keep going.”
Alternatively, the BCC has suggested the government pay SME’s energy suppliers directly and bear the brunt of the cost. “The Government put in so much effort and time and money to support those businesses through Covid – don’t give up now, we don’t want to go backwards,” Ms Haviland added.
Along with grants the BCC wants a temporary cut in VAT from 20pc to 5pc to reduce energy costs for businesses. They are also asking the government to postpone April’s National Insurance tax increases for at least 12 months. The BCC is also requested that Ofgem be given more power to strengthen regulation of the energy market for businesses.
The BCC has written to the government and the two Conservative candidates in the race to become the next Prime Minister, Liz Truss and Rish Sunak, proposing a five-year plan to help businesses from spiralling in the midst of a cost-of-living crisis. Ofgem is set to announce the next increase to its energy price cap in October, which could see energy bills increase to more than £3500 a year. The Federation of Small Businesses has called for an energy price cap for small businesses with 10 employees or less, similar to the one for households. With a corporate price cap, SMEs will not be exposed to skyrocketing energy bills due to the sharp jump.
A Government spokesman said: “The civil service is ready to deliver on the commitments of whoever wins the leadership context. We’ve cut taxes for hundreds of thousands of businesses by increasing the Employment Allowance and slashing fuel duty. We’ve also introduced a 50pc business rates relief for retail, hospitality and leisure businesses and put the brakes on bill increases by freezing the business rates multiplier, worth £4.6bn over the next five years.”