Call for ‘urgent’ business tax cuts to save recovery

Soaring costs and staff shortages are threatening to derail the Covid-19 recovery, a business group has warned as it called for urgent tax cuts to help small firms.

Rising costs could hold back growth at small firms according to a business lobby group. Picture: Jon Savage

Almost two-thirds of small firms surveyed by the Federation of Small Businesses (FSB) said their operating costs have risen over the past year and many exporters also said they are continuing to struggle amid rising shipping fees and loss of goods in transit

More than a third of small firms also cited access to appropriately skilled staff as a key barrier to growth over the coming 12 months, according to the FSB’s Q2 Small Business Index report.

The organisation is now calling on the UK government to help firms keep the recovery on track by reducing employer national insurance contributions, which it called a “tax on jobs”.

“It is yet another cost to think about in an environment where finding the right people is a nightmare,” said FSB national chairman Mike Cherry.

“Small firms are emerging from lockdowns under the strain of spiralling input and shipping costs, skills shortages, new exporting paperwork, emergency debt repayments, rent accruals and business rates.

“This government was elected on a manifesto that rightly promised to cut the jobs tax, and ministers must rediscover that reformist zeal if they want to unlock growth within the small business community and secure our economic recovery.”

Four in ten of those surveyed cite inputs such as raw materials as a contributor to the rising costs they are seeing, an 11 percentage point increase on the same quarter in 2019.

The FSB is also calling for the SME Brexit Support Fund, aimed at helping exporters following the EU withdrawal, to be relaunched after the survey revealed that one in five (23 per cent) of small exporters have temporarily or permanently stopped selling into the EU, and a further fifth (21 per cent) are considering halting sales.

More than half (53 per cent) have had goods held indefinitely at EU border crossings since April and a similar proportion (45 per cent) have lost goods in transit.

“Our exporting firms tend to be among our most innovative and profitable. Unless we can get them firing on all cylinders again – and produce more of them – we’re going to find our recovery is permanently hampered,” said Cherry.

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