SMALL businesses have been given a £4 million helping hand by the government – but experts warn “it simply isn’t enough to make a meaningful difference”.
The self-employed and small businesses struggling with their finances are to receive a helping hand through a new £4 million funding boost to business debt advice services through the Money and Pensions Service, the Government announced today.
The funding will go towards expanding access to expert support to help them get back on track, giving a leg up to an additional 16,000 businesses over the next three years to total 75,000 businesses.
An additional £2 million of funding this year will help modernise debt advice.
Economic Secretary to the Treasury, Rachel Blake, said: “From the plumber fixing your radiator to your local café, small businesses are the backbone of our economy, and we know they sometimes need a helping hand when times get tough.
“We’re building on the success of our expert debt services to help tens of thousands more get back on their feet.”
This investment starts to reverse the crumbling small business support landscape
Matthew Knight, Chief Freelance Officer at Freelancing.Support, said support for small businesses has been underfunded for years.
He added: “I’ve seen first hand just how important and invaluable The Business Debtline, and the broader work from the Money Advice Trust is. This investment hopefully starts to reverse the crumbling small business support landscape, which has been grossly underfunded for the last 15 years.
“However, this is only one piece of the puzzle. New business owners also need access to better education and training on how to structure and operate their businesses to reduce the risks of debt piling up in the first place, backing to tackle common issues like late payments, and better provisions for mental health at work for business owners not just their employees, to ensure this “backbone of Britain” can stay healthy in this challenging economic climate.”
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said businesses won’t actually get much if you spread it out to each of them.
She added: “My first thought is to look at the arithmetic. £4 million spread across 16,000 businesses is about £250 quid each. That isn’t a lifeline, it’s a token. Debt advice is welcome, but advice doesn’t pay a tax bill. The problem these firms have isn’t that they don’t understand they’re in trouble. It’s that the numbers stopped working.
“So is it a drop in the ocean? It’s a drop, yes. And I’d point out that the same Government offering the help is part of why the well ran dry, through higher employer costs, a heavier tax load and rates that have squeezed margins for years. As for being called the backbone of the economy, I’d treat that with the contempt it deserves.
“The backbone is the bit that carries the weight while everything else sits on top. Flattery tends to arrive just before another demand. If the Government truly understood small business, it would make being in business cheaper, not pay someone to explain why it’s so expensive.”
It simply isn’t enough to make a meaningful difference
Thomas Boughton, Founder at London-based Artillium Real Estate Finance, said the support isn’t enough.
He added: “Small businesses have been described as the backbone of the economy, yet in reality it often feels as though business owners have been overlooked and pushed aside. While a £4 million boost is a step in the right direction, spread across 16,000 businesses it amounts to just £250 per business.
“That simply isn’t enough to make a meaningful difference, regardless of the size of the company. I started my business at 24. Two years on, I can say it’s the hardest thing I’ve done. The pressure of looking after clients is constant, but the growing tax burden and rising operating costs are making it increasingly difficult for small businesses to thrive.
“This initiative highlights how disconnected policymakers can be from the realities facing business owners. It’s no surprise that many small and medium-sized enterprises are choosing to close their doors or relocate abroad in search of a more supportive environment. As it stands, there is very little incentive to start a business in the UK.”
Nouran Moustafa, Practice Principal & IFA | Defaqto Financial Adviser Of The Year at Roxton Wealth, said debt advice is crucial to small businesses.
She added: “Any extra debt advice for small businesses is welcome, but £4 million over three years for 16,000 additional businesses is not a game-changer. It is support at the edge of the problem, not a solution to the problem. The pressure on small firms is not just poor budgeting. It is higher tax, higher wages, higher rent, late payments, weaker consumer confidence and the cost of running a business rising faster than many can pass on.
“Calling small businesses the ‘backbone of the economy’ is starting to feel like a slogan. If the government genuinely believes that, policy needs to match the language. Small firms need simpler tax, faster payment culture, better access to finance and a growth environment where hiring and investment do not feel like punishment.
“Debt advice matters, but by the time a business needs crisis support, something has already gone badly wrong. The real aim should be helping firms stay healthy before they reach that point.”
Photo by Gene Gallin on Unsplash.
