Why small businesses like mine need the hope of an exit plan

Dr Liz Hind

The third anniversary of a business opening is supposed to be the point at which a business owner can relax a bit, knowing that they have a healthy business. On my third anniversary, I was forced to close. I was informed of the forced closure by a BBC producer while I was on standby to give a live radio interview. I cried on live radio, fearful for my future, of my business and of my staff.

I was forced to close when the support available for businesses and employers was still unclear. I made decisions about what to do with staff, not knowing whether I was doing it right or that I would get the money back. I have locked down in a closed business, wondering how long the reserves in the business will last.

At the start of the week, Labour Business published a report following a survey of its members – Labour Party members in businesses, small, medium and large, up and down the country. The picture that it shows is one of confusion and anger that businesses are going through unprecedented times, with insolvency as a real worry. We’ve received no clarity from the government and feel that they are reacting, rather than planning a response. The response from the banks has been even worse, with many expecting personal guarantees for what we were promised were emergency loans backed by government.

Labour Business members who employ staff report that they have taken a pay cut and placed the vast majority of staff into furlough, with only self-employed workers facing significant layoffs. These employers have not had clarity on the future, yet they have stepped up to do their best to ensure the safety of their employees. The advice and support is only just starting to appear, and for many it may be too late. Even just the top-up of employee wages is a high cost when there is nothing coming in.

Gaps in support are becoming more apparent, such as support for self-employed women who have taken maternity leave and businesses not in a rateable property. It is not surprising that gaps should appear as the support was hastily put in place with grand statements before any of the details had been established. We need to be monitoring the distribution of grant funding to ensure that it is being used to support businesses and workers where there is the greatest need and the greatest impact on businesses. Some will find that this crisis does not affect profitability.

The government has made employers responsible for the safety of their staff. We have been made gatekeepers of the only functioning benefit system, the furlough scheme. Employees are quite rightly frustrated and angry if they can’t access funds to secure their income, but employers should not be held responsible for a decade of austerity that has left state benefits in a parlous state and not fit for purpose. For employers to fulfil the role of benefits administrator, then government must make sure that employers are given the support that we need so that we have safety and security. We must work constructively to highlight where the support offered by government is failing and work together for a solution.

Making sure that the support is targeted will also help the most vulnerable of our workers. Another report released on Monday by the Institute of Fiscal Studies shows that the businesses forced to close are more likely to employ women and young people. Workers in hospitality and retail are also more likely to be in insecure employment. The scheme to furlough workers in these sectors will only make a difference if the employer is confident that there is a point to keeping them on. Long-term planning and optimism will have the knock-on effect of ensuring that insecure workers are kept in furlough with a topped up wage.

We’ve come through a period of chaos, yet we are still fighting for the future of our businesses and the security of our staff. What we desperately need now is the hope of an exit plan to let us reopen when it is safe to do so and get staff working again. We expect that some businesses will be slower to reopen than others, as some distancing measures may still be in place. Reopening pubs will be taken as a sign that we have returned to normal, so they will have to be last to reopen. But we can put in place plans now to provide support for when that does happen.

In the meantime, hospitality staff will be facing a long period of inactivity, many on 80% of wages, which are often already low. And that is if they have not already been made to fend for themselves in a punitive benefits system. Issues such as commercial rent payments need to be looked at to ensure there are businesses for them to go back to. The hardest hit will be small businesses, which are not taking state grants while paying shareholders.

Business owners have been made responsible for the safety and wellbeing of their employees. We must ensure that the efforts they have been making are understood and supported. We are facing an uncertain economic future – let us face it together. Let’s make sure that responsible business is applauded and that our future is collaborative and constructive. Hopefully we will all be able to raise a glass to that when we are back together again.

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