Business need ‘breathing space’ to stay afloat

FSB urges government help small businesses during cold snap

Carys Matthews 22 December 2010 11:42

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Small firms will require extra help from the government and banks to stay afloat this winter, a leading business organisation has warned.

The Federation of Small Businesses (FSB) has called on the government to take emergency measures to help small companies through the unprecedented cold weather, which is costing the economy between £600m and £1bn every day. The group has also called on the banks to provide “breathing space” for firms over the Christmas and New Year period.

With the confidence of small businesses, particularly high street retailers plummeting in the last year, the forthcoming VAT rise will mean that many of those will struggle to stay in business in the early part of 2011. Almost 40% of retailers predicted that their business prospects for Q4 would be worse than Q3 and the extreme weather has reinforced this.

John Walker, national chairman of the FSB, said: "Small businesses were banking on a good Christmas to make up for a bad year and the prospect of more bad news in 2011. Many shops and restaurants have taken on additional seasonal staff to cope with the anticipated demand of the Christmas season, but last weekend saw a drop in footfall of up to 30%, leaving businesses with increased overheads and falling trade.”

The FSB is advising the government, banks, local authorities and landlords to give small firms breathing space and recommends that: the Time to Pay scheme is extended by HM Revenue and Customs, to allow small businesses time to recover lost takings in order to have the cashflow to be able to pay, landlords should push back rent reviews, and local councils should grant hardship relief and temporarily reduce business rate bills for companies in financial difficulty.

Walker added: "The last thing this government needs is a wave of bankruptcies and shop closures in 2011, but small firms will find it very difficult to bounce back in the New Year when VAT increases to 20% and the spending cuts start to bite.

"We need to see a co-ordinated effort from government, banks, local authorities and landlords to give small businesses some breathing space to recover in the New Year."