The Corona Budget and the well-being of small businesses
In his first budget the Chancellor Rishi Sunak signalled the commitment of the Government to addressing the Covid-19 pandemic in the UK. However, while the Government's concerns rightly focused on the well-being of the nation's people, the Budget also focused on the well-being of business.
Clearly the UK economy is in challenging times, with uncertainty seemingly now the the new norm. While small businesses continue to grapple with the implications of Brexit unfolding in real time, the ’temporary disruption’ of the Coronavirus now poses a more immediate challenge.
Following the early morning announcement from the Bank of England to cut interest rates and reintroduce the Term Lending Scheme to the tune of £100bn, the Chancellor reeled off a veritable list of measures to mitigate the impact of the pandemic on the small businesses that represent the lifeblood of the UK economy. Together the timing of the budget demonstrated a synchronicity of monetary and fiscal policy that was almost flawless.
From discounting business rates by 100% in the sectors hardest hit, such as retail and leisure, to preferential Government backed loans for SMEs up to £1.2m, and grants of £3,000 for small businesses for over 700,000 small businesses. Undoubtedly these measure, coupled with enhanced statutory sick pay, will make a difference to small businesses across the UK. Without such measures the issue of sick employees and spooked customers could have a detrimental impact on small business!
Among wider support announcements were startup loans and funding for scale-ups, as well as additional resources for growth hubs and to promote export. A central challenge here is to ensure that firms understand and access the support available.
While the measures in the budget are positive, there remains a need to try and promote the resilience and competitiveness of SMEs in the UK more generally. The 'long tail' of small businesses continue to embody the productivity challenge the UK, but there are steps that can be made, from business planning to digital skills. Enacting these small but significant steps might make all the difference!
An interesting but not unexpected announcement related to the capping of Entrepreneurs Relief, a tax widely regarded as ineffective. However, in retaining rather than abolishing the tax, the Chancellor was keen to emphasise the need to foster the ambition of entrepreneurs - a message that was enthusiastically delivered.
The Small Business Charter is a UK wide network of accredited business schools, who are engaged with and supporting small businesses. One such programme is Leading to Grow, which is a programme on leadership and digital skills intended to enhance the productivity of small businesses. Business and management schools across the UK are about more than MBAs, and Small Business Charter schools have much to offer local small businesses.
In what at times felt like a give away budget, based on significant borrowing, the Chancellor made repeated references to 'getting it done’. While signalling intent, the impact of the current economic climate on small businesses remains to be seen but there is certainly ample opportunity for Small Business Charter accredited schools to step up and make a difference!
Professor Tim Vorley, Professor of Entrepreneurship at Sheffield University Management School, and Vice Chair, Small Business Charter