Last November, Chancellor Jeremy Hunt delivered a £14billion package to small businesses in his debut Autumn Statement as they grappled with higher energy costs.
This time round, small businesses might not be so lucky as the Treasury prioritises cutting inflation and reducing public debt.
Some have predicted Hunt has more wriggle room with public finances due to tax receipts and a lower bill than expected for energy support, but demands from small businesses are growing.
The ongoing effects of higher energy bills, business rates and issues in the labour market mean small businesses have continued to struggle through the winter.
We guide you through what we might see in the budget and what small business groups are asking for.
Make or break: Small business groups are calling on the Chancellor to introduce more support for struggling firms
The Chancellor has made it clear that his focus is on restoring some calm to the economy and bringing inflation back down to manageable levels.
Unlike his predecessor, there is less focus on economic growth but business groups are lobbying the Chancellor to include tax breaks for investment to help with the recovery.
The CBI has expressed concern about the government’s ‘super-deduction’ scheme for capital investment ending in March. The scheme offers 130 per cent tax relief on companies’ purchases of equipment.
Next month, corporation tax will increase from 19 to 25 per cent, which will be a further hit to struggling firms and do little to incentivise capital spending.
CBI director-general Tony Danker said: ‘This Budget is the opportunity to get the UK out of any recession sooner rather than later and transform the UK into a high-growth, innovation-first economy.’
Business rates and tax
Business rates have been one of the biggest sources of anxiety for small businesses in recent years.
Hunt has already extended and increased business rates relief, from 50 per cent to 75 per cent up to £110,000 per business. The small business and standard rates multiplier has also been frozen for another year at 49.9p and 51.2p, respectively. But does this go far enough for struggling small businesses?
Helen Dickinson, chief executive of the BRC has said the need for reform is ‘far from over’ and the changes made in the Autumn Statement ‘are a far cry from the fundamental reform promised in 2019.
‘While other business taxes like Corporation Tax and VAT rise and fall with the changes in the economy, business rates must be paid in full whether firms are making a profit or a loss. This makes business rates a final nail in the coffin of many struggling stores; shutting shops, costing jobs and preventing new openings.
‘Any meaningful plan for the future of our town and city centres must have wholesale reform of our Business Rates system at its heart.’
The FSB wants targeted help for smaller companies, highlighting the UK ‘will feature the highest tax burden since Clement Attlee and Stafford Cripps in 1948.’
It has called on the Treasury to completely scrap rates for firms in properties with a rateable value of up to £25,000 a year, paid for by a small increase to the multiplier on very large properties. The current threshold is less than £15,000.
Kate Nicholls, who runs UKHospitality, has also called for a temporary reduction in VAT to reduce costs, lower inflation and drive demand and growth. We saw its success during the pandemic and that can be replicated now.
‘The sector has shown its potential to deliver rapid economic growth and tackle inflation, something the country desperately needs, and the Chancellor has the power at the despatch box on 15 March to enlist hospitality to help achieve his aims. I would urge him to do just that.’
The Government announced the Energy Bill Relief Scheme last September, to help businesses with soaring energy bills.
But it’s set to be short-lived, as the Chancellor announced the EBRS would be replaced with the Energy Bills Discount Scheme from 1 April.
Industry leaders have hit back at the new, less generous scheme, saying it doesn’t touch the surface of the pressures mounting for small businesses.
We may yet see some further support to help businesses with their energy bills. It has been reported that the scheme for domestic customers may continue past April, but the Government has not indicated whether this will include non-domestic customers.
Even if there is little room for help when it comes to the discount scheme, small business groups are calling for more to be done to help businesses with energy efficiency.
> Read our guide to the new discount scheme and when bills will start to go down for businesses
The FSB has called for small businesses to be allowed access to energy efficient technology, to help mitigate costs, as well as a 14-day cooling off period for energy contracts.
This would come at a great expense, however, and Hunt’s focus appears to be on domestic customers.
FSB policy chair Tina McKenzie said: ‘There have been very encouraging signs that Jeremy Hunt ‘gets it’ – the Budget is make or break to see if he can turn words into action.
‘We need to help people back to work, get more entrepreneurs starting businesses, tackle inefficiencies in our energy use, and favour challenger businesses when it comes to R&D.’
The upcoming Budget has been trailed by some as the ‘back to work budget’ to address the crisis caused by thousands of over 50s retiring early.
One of the Chancellor’s biggest issues is improving labour market participation rates in a tight labour market.
Enterprise Nation is calling on the Chancellor to support the over 50s and the ‘unretired’ into both employment and self-employment.
‘Unemployment is expected to rise yet there is no dedicated programme to support a move from unemployment into self-employment since the New Enterprise Allowance scheme was scrapped,’ said Emma Jones.
‘The Department for Work and Pensions should consider reviewing the self-employment targets for the Restart programme so the focus is rebalanced from finding people jobs to supporting people to create their own.’
The FSB is calling on a new Kickstart-style scheme for those whose health problems have kept them out of work for a long time, as well as more help for over-50s employment.
Reform of the Apprenticeship Levy, a tax used to fund apprenticeships in large corporations, has long been touted but could be central to allowing the ‘economically inactive’ back into work. This would come at little cost to the Government.
Another key problem in the market is a lack of immigration, which is having a serious impact on key industries like hospitality.
UKHospitality is calling on the Government to implement minor, short-term immigration reforms ‘to counter the sales being lost due to labour shortages, particularly abolishing or reducing the Immigration Skills Charge and offering more flexibility to students to work longer hours.’
Surprisingly, there was little mention of fuel duty in the Autumn Statement but it is widely expected to increase 23 per cent.
Without intervention, small buisinesses are facing hte highest rise in fuel duty in 12 years, according to the FSB, with research showing just over half of firms balme fuel as one of the key reasons of higher costs.
However, small businesses might be fighting a losing battle here given the Government’s focus on net zero and Hunt will want to keep a close eye on the purse strings.
The IFS has already said that cancelling a fuel duty freeze could pay for public sector pay rises.
FSB National Chair Martin McTague said: ‘If fuel duty rises as planned, it would represent a missed opportunity to remove one of the obstacles that will hinder growth – but the Chancellor still has the power to rectify that mistake in [the] Spring Statement.
‘FSB is particularly concerned about the impact this will have on rural small firms – for instance, a cosy coffee shop in the southwest that relies on customers driving there if petrol becomes more expensive.
‘Firms that rely on cars and vans for petrol, such as delivery services, tradespeople and farmers, would also bear the weight of the impact.’