In the House of Lords last week Lord Leigh urged the Chancellor and the government to take more steps to help SMEs during the global pandemic.
SMEs all over the UK are grappling the reigns of their business as thousands of companies across the UK shut down during the coronavirus outbreak. Amid an ongoing global pandemic, how will the government support small and medium businesses across the country in their dire time of need? Lord Leigh of Hurley has taken the opportunity to stand up for SMEs urging the Chancellor and the government to step up their efforts and aid struggling businesses who are facing the impacts of COVID-19.
Lord Howard Leigh of Hurley, Senior Partner at Cavendish Corporate Finance & Deputy Executive Chairman at finnCap Group PLC, has told the House of Lords that more must be done to support UK SMEs through this period of uncertainty as coronavirus continues to sweep across the globe. Speaking in the House of Lords Budget debate last week, Lord Leigh said that whilst the government was providing commendable support in regards to sick pay, the business interruption loan scheme and business rate relief, more needed to be done to support SMEs. He urged Chancellor Rishi Sunak to go further and relax insolvency laws, create emergency direct support through the tax system and re-assess recently proposed changes to Entrepreneurs Relief. Such moves, argued Lord Leigh, would provide more direct support to businesses which need it.
In addition, Lord Leigh reminded ministers that business’ access to working capital was vital to prevent SMEs struggling to stay afloat. Although mechanisms had already been put in place to try to ensure this, he noted, public and commercial lenders may not have the tools to grant business access to liquidity. Businesses in the travel, leisure, retail and gambling sectors could be particularly affected and deemed non-viable, Lord Leigh warned.
Lord Leigh is urging the government to use a test to see which businesses have a drastic drop in their income in order to determine which companies are at serious risk and which ones are not. Under such a scheme, employees and employers in companies who passed the test would be eligible for an immediate PAYE holiday up to the top of the basic rate threshold for the duration of the coronavirus crisis. In turn, these companies would not qualify for the Government’s subsidised loan scheme. This is to allow the government to focus on providing loans to businesses which were not at immediate risk but needed some additional support.
Lord Leigh also highlighted how current insolvency laws are not helpful for businesses during such a unique crisis. Directors of Limited companies who are mindful of their responsibilities to creditors but conscious of avoiding personal liability are left with almost no option but to call in the administrators, he argued. Lord Leigh insisted it was vital the government relax the insolvency laws for the next few months, similar to the approach Germany is currently taking. He suggested how a creditors moratorium was the only way for businesses to get through this crisis and prevent them from reaching the brink of collapse.
Finally, Lord Leigh noted how reducing the lifetime limit for Entrepreneurs Relief from £10m to £1m would deter entrepreneurs from investing and reinvesting in UK start-ups. In addition to talent leaving the UK, such a change to the relief would deprive HMRC of in capital gains and more importantly, future corporation and payroll taxes, he concluded.
As SMEs across the UK continue to face the economic impacts during the coronavirus outbreak, is important the government increases support given to small and medium businesses and help survive during this crisis period.
1 April 2020