‘Keep your promises and leave no one behind, Mr Sunak’
Chair of IoD Liverpool and director of McIver Scott Recruitment, David Wafer, says it is time for Chancellor Rishi Sunak to ‘fix his broken promises’ and offer a lifeline to entrepreneurs
At the beginning of the COVID-19 pandemic last March, Chancellor Rishi Sunak promised that he would do “whatever it takes” to help the economy and that “no one will be left behind”.
While we are living through unprecedented times, there is now a huge chasm in the support offered to business sectors and entrepreneurs. At the start of the pandemic the Government had to act urgently and did so by copying the furlough scheme that several countries had already put in place. It was welcomed but far from perfect.
It helped businesses and the self-employed. However it offered no support to owner directors of SME LTD businesses. Many ask what’s the difference? Technically as an owner/director of a LTD company you are employed by the business even if you own it.
However that then excludes them from claiming self employment grants of £2,500 per month or up to £3,800 in some cases whilst still working. Some suggest these owner/directors could furlough themselves but most are paid on the minimum threshold of the basic tax allowance and the remainder based on a dividend of profitability.
Therefore they would only be eligible for furlough at 80% of the basic threshold meaning they would receive £500 a month but you aren’t allowed to work.
There are 3m people in the U.K in this situation. While it was undoubtedly unfair most accepted it will be short-lived. We are nearly 12 months from the start of the pandemic and support offered.
SMEs are the engine room of the UK and make up 97% of the economy. Micro businesses, those with fewer than 10 employees, become SMEs and employ more staff and generate more revenue for the local economy. So we have to protect them.
The cost so far has been that many smaller businesses have already failed. We have now reached a cliff edge scenario where a huge number who have struggled through are now facing unbearable stress. That is likely to result in a burst dam effect on those businesses and the local economy if they fail.
The human cost is awful to see. I have spoken to desperate entrepreneurs whose homes and business are at critical risk because of the desperate situation and the feeling they have been left behind. It is inevitable taxes will rise to pay for the support that has been given out of the last 12 months and these 3m entrepreneurs will be asked to pay for something they could access.
The impact of this is also having an effect on fighting the virus. I have spoken to two teachers who have said that they have nearly a third of the school still attending during this lockdown. Many are parents claiming they fit into different categories of essential workers. But if you run a business that depends on you paying your mortgage, you are left in a desperate situation.
The Government announced a grant for “low paid” workers to access to prevent them having to make the choice between self isolating and going to work. This is the same situation.
The impact on mental health is a ticking time bomb and I really hope we don’t see suicides on the back of this lack of support. So what action would I like to see?
Owner/directors receive the same support as self employed and back dated according with an adjustment for any furlough claimed. A second wave of support grants. Hospitality isn’t the only industry suffering.
All of this could be paid for by withdrawing the rates holiday that was given to supermarkets who have benefited hugely during this time often at the expense of small independent businesses.
My message to the Chancellor is ‘your words matter’. Do the decent thing and fulfil your promises.