The Federation of Small Businesses (FSB) has made a last urgent appeal to the government to help small firms by bridging the gap between the end of Covid financial support this Thursday and the July 19 full reopening.
Full furlough, business rates exemptions and deferred VAT payments will all end on Thursday July 1, eighteen days before the end of all lockdown restrictions in the UK.
The so-called “Freedom Day” had been scheduled for June 21, but the government postponed it another four weeks to July 19, in order to give the NHS time to vaccinate more people.
Sajid Javid, who replaced Matt Hancock as the new health secretary on Saturday, is set to rule out any early easing of restrictions later today in parliament.
The FSB is concerned that the gap between support schemes ending and the full reopening will exacerbate the difficult financial situation many small businesses find themselves in after over a year of lockdowns.
In an appeal this morning, it urged the government to reconsider the timeframes for the business support measures that are due to end this week.
Although the government has committed to continuing the furlough scheme, come Thursday the compulsory minimum of 5 per cent of wage costs that employers contribute for furloughed staff through national insurance and pension contributions will rise to 14 per cent.
Businesses will also have to start paying any VAT deferred from last year, and the retail, leisure and hospiality sectors will lose business rate exemptions.
The FSB also warned that small businesses will take a double hit on July 1 as further changes to EU trading rules come into effect. A full wind down of temporary import support measures that were put in place for six months after the Brexit transition period ended is due on Thursday, too.
FSB national chairman Mike Cherry said: “Last year the Government told us that it would do “whatever it takes” to help the 5.9 million sole traders and small businesses on which our recovery will depend.
“But now – after a crushing delay to the reopening road map – the new support measures are limited to those which do not cost the Treasury a penny.
“Unless the Government acts now, it risks a serious economic flashpoint this Thursday – a moment at which financial support starts to wind down, further trade changes take effect and repayments on emergency loans start to fall due,” Cherry added.