Covid-19 recovery support for businesses left behind by existing government schemes.
On 9 July ACCA brought together a selection of ACCA members and industry partners to discuss Covid-19 recovery support for businesses left behind by existing government schemes.
Chaired by Head of ACCA UK, Claire Bennison, the meeting was attended by ACCA members, industry partners and welcomed guest speakers including Liberal Democrat Spokesperson for Business & Trade, Sarah Olney MP, Small Business Commissioner Philip King and Forgotten Ltd campaign founder Gina Broadhurst.
Rob Burlison – Director of Corporate Affairs, Intuit Quickbooks
Sarah Olney MP, Liberal Democrat Spokesperson for Business & Trade
Liberal Democrat Spokesperson for Business and Trade, Sarah Olney MP
Sarah Olney MP opened the meeting, relaying how her own experience with part-time study to become an ACCA qualified accountant has given her insight into how retraining opportunities can be a lifeline for those needing to change employment. She highlighted that these kinds of pathways will become very important in the next few years as unemployment rises and individuals look to retrain and re-enter the workforce.
Reflecting on the Chancellor's comments, Sarah said that though initially well received, there should be concern about the execution of these plans. In particular schemes such as the job bonus cast a wide net and may include those already planning to bring back employees, when funds could be put to better use in higher risk sectors, for whom the £1000 incentive might not be enough. She welcomed the reduced VAT rate for tourism and hospitality but questioned support for other areas of the economy and the ‘green recovery’.
Small Business Commissioner, Philip King
Philip spoke on how business trends were affecting financial outlook. Across the board there had been a sharp rise in late or frozen payments resulting in emotional and personal impacts, exacerbating mental health problems, causing sleepless nights and affecting relationships. Philip highlighted, in the work he and his office undertakes, good practice and poor practice including where his office has intervened. He felt it would be important to raise awareness of this impact among debtors to examine how they can support the supply chain now to protect its existence in the future. Examples included large companies extending support for employees out to the supply chain or bringing forward payments to creditors to provide immediate cashflow support.
Founder – Forgotten Ltd, Gina Broadhurst
Gina explained how Forgotten started in March as a grassroots campaign group of small business owners which has become a public campaign representing around two million limited companies employing 7.5m people. The campaign aims to raise awareness of the lack of support many of small businesses face and break down a generalised perception of owner managers as high-earners who don’t warrant support. The group's research had shown that almost a third of these businesses don’t expect to exist in a year, potentially affecting millions of jobs.
Open discussion key points:
Following the fall out of the 2008 crash many started businesses as part of an entrepreneurial culture encouraged by government. Now, due to business structure they have not received support and appear to be pinpointed as tax avoiders.
Businesses now seem to be demonised despite a longstanding acceptance that business owners forfeited employment rights in return for limited company liability to protect assets such as their family home and personal savings. Peter highlighted that government schemes have been particularly unfair to those that started a business after April 2019 and those sitting just above the hard edge of the SEISS £50,000 income threshold.
In order to ‘build back better’ with the business resilience that will help many survive there should be more support to help owners change their business model and the way things are done within the company.
46% of small businesses have a website compared to 96% of larger businesses. Those thriving have been those able to pivot to digital platforms and communications tools to reach a wider audience.
Lender liquidity is an imminent issue; in 12 months lenders are likely to face difficult decisions as defaults begin to stack up from CBILS and BBLS and government guarantees have to be called upon through entry into the debt recovery process. To get cash flowing now, government must help provide liquidity to the majority of alternative lenders and promote lending as a force for good and sustainable business practice.
Sarah Olney stressed that there was enormous momentum in Parliament for these issues and the Liberal Democrats would continue to raise the highlighted trends but pressure on the Treasury would also be crucial.
Sarah said the insurance industry in particular needs to stand by its customers and as an economy we should value those that see the interests of their suppliers and customers as their own.
She also echoed comments on the availability of lending and was keen to further discuss policy around alternative financial products such as equity conversion and welcomed further discussions with the wider professional community.
Claire Bennison thanked attendees and committed to bringing the group back together to discuss further measures and continue the discussion around support for at risk sectors.
ForgottenLtd Campaign Overview
The ForgottenLtd Campaign exists to raise awareness of the lack of meaningful government support for the small business community across the UK. We call on the government to address this disparity by extending Covid-19 support packages to those of us left behind. We are asking for parity. We are asking not to be forgotten.
As small limited companies, we’ve been left out of most government financial packages. The situation is that:
As directors of small and micro limited companies, we are not eligible for the self-employed income support scheme (SEISS)
Many of us do not qualify for small business grants, as we are not in commercial premises
Although the Bounce Back Loans scheme is now available to some, many of us do not see taking on large debt in such an uncertain business landscape as a realistic option
Furlough is a catch-22 for company directors. Unpredictable cashflow means our salaries are low, so the scheme doesn’t cover our living expenses. And if we furlough, we're not allowed to work on saving our business
The negative cashflow position we find ourselves in is making it impossible for some to restart their business and become operational again
The mental health implications are immense, and are fast becoming a real area for concern
How to save UK #ForgottenLtd small businesses, our campaign asks include:
Reconsider putting directors of small limited companies on an equal footing with the self-employed income support scheme (SEISS)
Give small and micro limited companies a corporation tax rebate
Convert bounce back loans to grants
Increase the discretionary grant fund allocated to local authorities and, crucially, create parity of eligibility criteria, in all local authorities across the UK, to avoid postcode lottery
Allow furloughed directors to continue to work to support their businesses
Allow furlough for limited company directors paid via annual PAYE
Extend business support grant to all small businesses