Business Committee Warns of Pandemic-Level Pressures on UK Firms
The Government must implement a series of major reforms to halt business closures and reverse the decline on high streets, according to a stark warning from an influential parliamentary committee. The Business and Trade Committee has issued a fresh report indicating that small businesses across the UK are now operating under pressures similar to, and in some cases worse than, those experienced during the Covid-19 pandemic.
Urgent Need for Coherent Support Plan
Liam Byrne, chair of the committee, emphasised that a "more coherent and ambitious plan" is urgently required to support businesses. The report found that current pressures are "cumulative, structural and self-reinforcing," creating a significant risk of accelerating business closures. Without decisive action, the Government risks undermining its own growth agenda.
The committee highlighted several critical areas needing immediate attention:
- Late Payments: Evidence from Sage indicates UK small businesses were owed £112 billion in unpaid invoices by the end of 2024. Nearly half of all invoices are paid late, with payment terms of 60 to 90 days now routine in sectors like construction.
- Business Rates: The current system is disproportionately affecting bricks-and-mortar businesses, contributing to a pattern of closures on UK high streets.
- Rising Costs: Energy costs and retail crime are placing additional strain on physical retailers.
- Complex Tax System: SMEs face barriers to growth that are compounding rather than easing.
High Streets at Risk
Mr Byrne stated: "SMEs are facing late payments, rising energy costs, increasing crime, a complex tax system and barriers to growth that are compounding rather than easing. These pressures are not isolated; together they pose a real risk to business viability, high streets and economic growth. High streets do not die by accident. If the Government is serious about growth, it must set out a more coherent and ambitious plan for the businesses that make up so much of the UK economy."
The report specifically drew attention to how business rates, retail crime, and energy costs are creating disproportionate challenges for physical retailers compared to online counterparts.
Government and Opposition Responses
A Government spokesperson responded: "Small businesses are the lifeblood of our communities and while we know they are facing a difficult time, we are determined to make the UK the best place for them to thrive. That's why we are supporting them with a £4.3 billion support package to cap big business rate bill hikes and by taking action through our Modern Industrial Strategy and Small Business Plan, and we will also publish a new High Streets Strategy later this year to reinvigorate our communities."
Shadow business secretary Andrew Griffith commented: "Today's report from the Business and Trade Select Committee confirms what high street businesses already know: business rates, retail crime and energy costs are pushing bricks and mortar shops to the brink. Labour's answer is higher taxes and more regulation."
The committee's findings underscore the urgent need for comprehensive policy interventions to address the structural challenges facing UK businesses, particularly as they navigate pressures reminiscent of the pandemic era.
