Amid a credit crunch, recession and the Pre-Budget Report, the economy is on all of our minds at the moment. Yet, for the owners, workers and customers of small businesses, times are especially tough.
Last week I met with the Essex Federation of Small Businesses (FSB) to hear about some of the problems facing small businesses in our area. While the words 'small business' do not seem to pack the rhetorical punch needed to push their way into newspaper headlines, previously healthy businesses in Essex are facing a crucial race against time for their very survival, with banks strangling their credit supplies, reduced trade and more expensive borrowing terms.
Small and medium enterprises make up a staggering 99.9 per cent of UK businesses by number. Their impact is pervasive throughout Essex as the lifeblood of our community, providing employment, revenue and services vital to us all.
Despite a massive bail-out by taxpayers, the banks seem unwilling to pass this support on to small businesses. Instead, credit lines are being unexpectedly cut, the cost of existing finance is being hiked, and interest rate cuts are not being passed down the chain. The Government needs to force these banks to remove their python-like squeeze on the credit flows to small businesses.
Until credit flows resume, small businesses must be given breathing space to prevent otherwise healthy companies going to the wall in droves. A temporary VAT holiday and the lowering of National Insurance contributions would be suitable short-term measures here. Reducing the Small Company Corporation Tax and cutting the red tape and bureaucracy small businesses seem to face at every turn would also do wonders for their longer-term progress.
While there is some help already out there for small businesses in Essex, it remains woefully under-publicised. Many businesses are unknowingly eligible for the Small Business Rate Relief and for the Small Firms Loan Guarantee Fund. Participation in these schemes can provide those crucial extra funds to push small businesses through the current squeeze.
The 'Keep Trade Local' campaign run by the FSB is just one way that we can all band together to help our small businesses. Through supporting our local small shops and services, such as post offices and pubs, against the rising tide of out-of-town retailing, the internet and higher costs, we can all contribute towards their longevity.
Small businesses are the critical engine room of our economy and the lifeblood of our community. We must fight hard to preserve them through these difficult times. "