Government is running out of time to support businesses in urgent need

The British Chambers of Commerce (BCC) has written to the Prime Minister, Chancellor of the Exchequer and both leadership candidates for the Conservative Party proposing a comprehensive five-point plan to provide vital support to UK businesses.

The BCC five-point plan to support businesses includes the following measures:

1.      Ofgem to be given more power to strengthen regulation of the energy market for businesses

2.      Temporary cut in VAT to 5% to reduce energy costs for businesses

3.      Covid-style support by introducing Government Emergency Energy Grant for SMEs

4.      Temporarily reverse NICs and put money back into the pockets of businesses and workers

5.      Government to immediately review and reform the Shortage Occupation List (SOL) to help bring down wage pressures and fill staffing vacancies.

The cost-of-living crisis and the cost-of-doing business crisis are two sides of the same coin. The Bank of England’s projections of a recession and consumer confidence reported by GfK at a 50-year low are clear signs that the Government is running out of time to offer businesses and households the support they need.

These projections are not a surprise to the BCC or the business community. Over the last 18 months, BCC research has shown unprecedented inflationary pressures on businesses, with two thirds of firms in Q2 2022 expecting further price rises. Energy bills, raw materials, and labour costs are all cited as the top drivers of price rises.

Worryingly, BCC research is also showing a reduction in the percentage of firms expecting to grow in the next twelve months, from 63% in Q1 to 54% in Q2. In January, BCC found that 23% of businesses surveyed were looking to scale down or even consider closure in response to rising costs.

Firms cannot afford to wait another month without practical support measures being put in place. Now is the time for action.

Addressing the challenges facing businesses and households, Director General of the BCC, Shevaun Haviland, said:

“Today I have written to the Prime Minister, Chancellor of the Exchequer and both Conservative Party leadership candidates expressing my concern for businesses and households during these challenging times.

“Since the start of 2021 we have been repeatedly hearing the same message: the cost-of-doing-business is increasing.

“At over 10%, CPI inflation is at a 40-year high; interest rates are seeing the largest increase in 27 years; and eye watering energy bills have created a perfect storm of increasing costs. The impact of these challenges on consumers, businesses and wider society cannot be overstated.

“Consumer confidence reported at a 50-year low, and the Bank of England’s projections of a year-long recession, demonstrates that the cost-of-living crisis and the cost-of-doing-business crisis are two sides of the same coin.

“The BCC’s five-point plan is not solely about ensuring support for businesses. It is also about protecting jobs, securing livelihoods, and creating a vibrant and prosperous society for everyone.

“Good business is good for our communities, and we must support firms and the individuals that run them to ride out this economic storm.

“In June, we gave the Government until the Autumn budget to get its house in order, but the latest economic projections released since then have been worse than expected. We simply cannot afford to see another month of the same old news.

“Through feedback from accredited Chambers of Commerce around the UK, alongside our extensive research and survey work, we know what businesses require now to survive and plan for growth. The regulation of the energy sector for businesses must be strengthened. Businesses also need to receive support for spiralling costs through grant funding and a reduction in VAT on energy bills, along with measures to boost growth such as a temporary reversal of NICs and an urgent reform of the SOL to fill staff vacancies.

“The problems are well understood. We at the BCC are offering solutions. It is now over to the Government to take action to protect businesses, livelihoods and jobs.”