[Sir Edward Leigh in the Chair]

Part of the debate – in Westminster Hall at 2:30 pm on 10th November 2020.

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Photo of Elliot Colburn Elliot Colburn Conservative, Carshalton and Wallington 2:30 pm, 10th November 2020

I beg to move,

That this House
has considered support for SMEs during the covid-19 pandemic.

It is a pleasure to serve under your chairmanship, Sir Edward. At the request of the Petitions Committee, I would like to mention e-petition 305024, entitled “Extend grants immediately to small businesses outside of SBRR”, and e-petition 307959, entitled “Business Rate Relief to be extended to all small businesses in healthcare”.

Small and medium-sized enterprises account for the overwhelming majority of businesses in the UK. In Carshalton and Wallington, for example, nearly 90% of businesses are microbusinesses, having only zero to nine employees, and SMEs make up 99.8% of all businesses in my constituency. According to the Federation of Small Businesses, at the start of 2020 there were 5.94 million small businesses with zero to 49 employees, making up 99.9% of the business population overall. They account for three fifths of employment, employing 16.8 million people and with an annual turnover of £2.3 trillion, which is 52% of the annual turnover of the UK private sector. SMEs are the lifeblood of our local communities and are at the very heart of those communities. Not only are our local retailers loved by the communities we represent, and not only do they provide jobs for local people, but they are active and engaging members of our local communities.

That, I think, is why the impact of coronavirus on our SMEs has been so tragic and upsetting in many cases. We have been unable to visit our favourite local retailers and have watched many of them wrestle with the agonising choice of whether or not they have a future in our local communities at all. I think it demonstrates the strength of feeling in those communities that while preparing for this afternoon’s debate, my inbox has been inundated—I am sure the same is true of the inboxes of many colleagues present—with briefings and requests for meetings.

I am incredibly grateful to industry representatives for their help in preparing for this debate, and am glad to see so many right hon. and hon. Members present to take part in it. It is fair to say that during the pandemic, the Government have stepped up to provide an extensive package of support to business, which is very welcome and has helped to save millions of jobs that would otherwise have been lost. However, there are still concerns, which I will address throughout my speech, and I am sure other hon. Members will have concerns as well.

I am not going to go on for very long, because I know that the speaking list is quite full, but I would first like to turn to the coronavirus job retention scheme. The news that the Government have extended that scheme to March is very welcome, and I extend my thanks to the Government for doing so. By midnight on 18 October, approximately £41.5 billion had been claimed under that scheme. There are 1.2 million employers who have taken part in it, and nearly 10 million jobs have been furloughed since the scheme began, including 5,200 in my own constituency. Again, that extension is welcome, but the key question from the CBI is about the exit strategy from 2 December. Most businesses are assuming that we are going to go back into the tiered system, but the CBI and the industry are looking for further clarity from Government regarding the road map out of this second national lockdown, so that businesses have ample opportunity to prepare financially for what lies ahead.

May I also raise the issue of the cut-off date for the furlough scheme? A local business in my constituency, Energie Fitness in Wallington, recently took on a new staff member. However, due to the cut-off date for the furlough scheme, that person is not eligible to be furloughed, and sadly it now looks as if their job may be in jeopardy, so I would be grateful if the Government could take another look at this issue.

The job retention scheme has been backed up by a series of loan schemes, with four in total. Overall, as of 18 October, £62.7 billion worth of loans has been approved across those four schemes. In my own constituency, for example, £13.42 million worth of loans has been approved under the business interruption loan scheme, and £65 million worth has been approved under the bounce back loan scheme. Again, the top-up and extension of those schemes are very welcome, but the industry still has some concerns that I would like to put to Government.

Approximately 250,000 SMEs are believed to be locked out of the bounce back loan scheme simply because they do not bank with one of the 28 accredited lenders, according to estimates made by the all-party parliamentary group on fair business banking. The APPG chair, my hon. Friend Kevin Hollinrake, is here, so I will leave it to him to go into more detail later. I appreciate that the Treasury has been pushing back in recent weeks but, while stopping short of forcing banks to act differently, there really needs to be a greater focus on this issue, to ensure that businesses do not get locked out of that potential financial support.

The two key areas I want to focus on are the self-employed and grant funding. The first tranche of the self-employed income support scheme closed on 13 July. It received 2.7 million applications, and a total of £7.8 billion has been claimed, including £11.6 million in Carshalton and Wallington. The second tranche opened on 17 August and, as of 18 October, 2.3 million claims had been made, worth a total of £5.9 billion, £13 million of which was claimed in Carshalton and Wallington.

Once again, I welcome and greatly appreciate the Government extending that package, as well as the pledge of a £7.3 billion refresh package of support for the self-employed. However, there are still some real concerns. A study by the Centre for Economic Performance at the London School of Economics found that, in August—a month that saw the economy beginning to recover from the first lockdown—58% of the UK’s 5 million self-employed people had worked less than normal, and that one fifth of them anticipated quitting altogether, rising to 58% for those under the age of 25. Apparently, 1 million people in the UK are planning to give up being self-employed after seeing their earnings decimated by the covid-19 pandemic.

That situation was highlighted just this morning by the Federation of Small Businesses, which noted that 500,000 fewer people than last year—that figure was released today—are now registered as self-employed. I am sure that we will hear many examples of what has happened to the self-employed, especially freelancers and company directors, who have not been able to access financial support. I should declare an interest at this point as a participant in the all-party parliamentary group on ExcludedUK. The group emerged back in March, off the back of the first round of announcements of financial support, and it argues that much more needs to be done to help the recently self-employed, limited company directors and other groups that did not benefit from the self-employment income support scheme. That call was echoed by the FSB this morning, so I ask the Government to look at the eligibility criteria, to ensure that the self-employed can once again be the engine of economic recovery when we come out of lockdown.

I will also touch on business rates relief and grant funding. Again, I want to draw attention to the good work that has been done. Retail, hospitality and leisure businesses in England are receiving a 100% business rates holiday through the expanded retail relief. They will not pay business rates in 2021 and English local authorities estimate that just over 373,000 business premises were eligible for the expanded relief as of 5 July this year, and that those businesses will receive around £10.7 billion of relief. In my own constituency, 384 businesses have benefited from this support, at an estimated cost of £8.6 million.

However, there are still concerns. I will start with wholesalers, such as Bestway Wholesale in my constituency. Wholesalers play a really vital role in the supply chain, especially in the hospitality sector, but they have lost between 80% and 90% of their trade with the closure of the hospitality industry, and several are on the verge of collapse. These SMEs provide employment and skills, and are often the lifeblood of the local communities that they are part of. However, they are worried that without urgent financial support in the form of business rate relief, there will be significant job losses up and down the country.

I welcome the Government’s commitment to the small business grants fund, the retail, hospitality and leisure grant fund, and the local authority discretionary grants fund. In total, the first two of those funds were worth more than £12 billion, which was obviously expected to be distributed. As of 16 August, £11 billion had been paid out to nearly 900,000 business properties. I particularly thank the Government for the local authority discretionary grants fund. So far, grants of more than £239 million have been paid out to over 37,500 businesses. In Carshalton and Wallington, £6.6 million has been paid in small business grants, £4.4 million in retail, hospitality and leisure grants, and £510,000 in local authority discretionary grants.

I pay particular tribute to the Government for introducing the local authority discretionary grants. There were real concerns earlier this year from businesses that fell outside the original grant scheme, particularly those that did not pay business rates, predominantly due to a rental agreement—if they were a council tenant, for example—or because they were in shared offices. Park cafes are an example, including the Pavilion Café at Beddington park, Mellows Pavilion Café at Mellows park, Sassis in the Grove, Cheam Park Café, as well as the Sutton business park in Hackbridge. They are all, by every stretch of the imagination, a small business and would fit that description if they had a property of their own, but they were not eligible for the grants simply because of their rental agreements. I therefore thank the Government for making the move on that.

There are lingering concerns, however, when it comes to grants. This morning, the Federation of Small Businesses expressed concerns that the grants were not at the same level as grants in March 2020. It has asked what the difference is this time. Grants need to be greater than the £3,000 put forward, because SMEs are struggling with cashflow and that would really help. In addition, some businesses still fall outside the scope of the grants. An example from my own constituency is the Windsor Castle pub, which is having difficult conversations about the possibility of closing altogether. Its rateable value means that it is not eligible for financial support, and it has real concerns about coming out on the other side of the crisis.

One of the e-petitions I mentioned focuses on the grants, and its prayer states that cash grants are

“only for businesses in receipt of the Small Business Rates Relief or Rural Relief, or for particular sectors.”

It continues:

“Small businesses are dying by the day and jobs are being lost. We need fast, easy access to cash grants for small businesses enabling them to survive COVID-19.”

I hope, therefore, that the Government will review the scope and reach of each of these grants.

Given the time constraints, I will not go on to list everything the Government have provided or the sector’s concerns. I am sure we will hear a lot about those from other hon. Members present. I will just pick up on one anomaly and ask the Minister to take a look at it—namely, the 5% VAT cut on admissions. I hope the Minister will take a look at what seems to be a problem in the system: bowling alleys are not eligible for the 5% cut, even though trampolining and mini-golf businesses are eligible, as are cinemas. That seems to be a strange anomaly in the system. I would be grateful if the Minister could take a look at that.

I shall bring my remarks to a close and allow other Members to get in. I am grateful to the Government for the support they have provided to SMEs so far, but what businesses—and, indeed, all of us—need is a clear road map to reopening. The Government have been clear, and I agree, that repeated lockdowns are not the answer. We had some good news about a potential vaccine yesterday, but we know that the roll-out will not happen overnight and that going back to some semblance of normality is not going to happen any time soon. That is why, essentially, we need a plan for living with the virus in the longer term—one that does not shut down huge swathes of our economy and put jobs at further risk. On top of the financial support that I have already outlined and the need to address the sector’s concerns, I hope that we can get that road map and plan for what operating a business will look like after we get out of this second lockdown. Uncertainty is one of the worst things for a business, and it can be just as damaging to SMEs as poor cashflow. I hope that we can look at the SME support that the sector is calling for, get that road map to reopening, and give SMEs the confidence to start planning for the future.