Latest research by alternative lender Capify finds SME owners are looking to the new Truss government to assist with a plethora of business challenges ranging from soaring inflation, weakening demand and rising interest rates.
Small business needs big help from new PM
New research from specialist finance provider Capify shows that Britain’s small and medium-sized enterprises (SMEs) are demanding urgent support from the new Truss government
Small businesses are calling on new Prime Minister Liz Truss to deliver on her campaign promises to boost growth, reduce taxes and cut red tape. Truss, who won the Conservative leadership election with 57% of party members’ votes, faces a baptism of fire as leader, with an in-tray full of challenges ranging from the energy crisis and widespread industrial action to the ongoing fallout from Russia’s invasion of Ukraine.
But latest research from SME specialist lender Capify shows that Britain’s SMEs are looking to the new Truss government to help them tackle the problems of soaring inflation, weakening demand and rising interest rates.
Potential tax cuts
Looking at specific policies, almost two-thirds of firms (64%) say they would like to see a reduction in the rate of corporation tax, Capify found. During the campaign, Truss pledged to scrap next year’s planned corporation tax increase – it is due to rise to 25% from April 2023. However, it is not yet clear whether the new PM intends to reduce the rate below the current 19%. Truss has also pledged to review the current system of business rates, which could lead to lower tax bills for some firms, and she has also said the tax system should be made fairer for self-employed workers to reflect the fact they do not receive non-wage benefits such as paid holiday entitlement and employer pension contributions.
Dealing with the energy crisis
The next most popular policy among survey respondents is a cut in the VAT rate on energy bills, backed by 46% of businesses. At present, VAT is payable at the full 20% rate on commercial gas and electricity bills, compared to the special 5% rate levied on domestic energy use. While Truss said she wanted to suspend the green levy portion of UK energy bills, she made no additional concrete proposals to tackle rising gas and electricity costs for businesses or households during the campaign – although the new PM has promised decisive action during her first week in office.
Slashing red tape
Some 37% of companies say they would like to see a reduction in red tape from the new government. Truss has promised to abolish all legislation derived from the UK’s membership of the European Union by the end of 2023.
A third of firms (33%), meanwhile, are looking for government support in addressing labour shortages. Truss says she supports the idea of expanding the seasonal workers scheme, which makes it easier for the likes of agriculture businesses to hire overseas workers. There is also support from companies for improved access to finance (29%), greater investment in the government’s levelling-up policies (21%), and tax breaks for green investment (17%).
Truss’s victory in the Tory leadership election comes at a time when businesses across the country are experiencing serious cash shortages. Capify’s latest Business Confidence Survey, shows that SME owners are growing increasingly concerned about dwindling cash reserves, with revenues struggling to keep pace with rising costs.
John Rozenbroek, CFO/CCO at Capify, said: “It is no secret that the new prime minister is facing an unprecedented array of challenges as she takes office. But it is vital that Liz Truss puts the health and requirements of the UK’s SME community – the backbone of the British economy – at the heart of her policy programme.
“Our research shows that confidence among SMEs has shown a marked sign of decline since the start of the year as inflation and economic weakness begin to bite. If businesses are to thrive and make the kind of investment needed for their and the UK’s future success, it is vital the PM hits the ground running and delivers focused support for Britain’s smaller businesses – both to address urgent crises like rocketing energy bills and to put the UK economy on a sounder long-term footing.”
Rozenbroek added: “Clearly the new Cabinet will have a huge amount to work through to address these issues and Capify we will continue to be there to support SMEs with finance provision for both short-term working capital and cash flow requirements, as well as longer-term investments.”
