LISA NANDY - Small businesses need help now
At the start of the Coronavirus lockdown, the Chancellor put in place the “Coronavirus Business Interruption Loan Scheme”.
The scheme is designed to support small and medium-sized businesses with a turnover of less than £45m per year get through this crisis.
The government will guarantee 80% of any loan that businesses need to help them survive the lockdown, with the banks guaranteeing the remaining 20%.
This was an important step for the government to take. Small businesses are the bedrock of our community and our economy. Their owners often put their own savings and security at risk, and devote years of hard work to become established and thrive.
They provide much-needed employment and services to their community and beyond.
From hairdressers to pubs, builders to nurseries, Wigan relies on them.
The successful ones look after their staff, pay them properly, treat them well and understand the importance of teamwork, so that everyone benefits when times are good and they have the resilience to survive when challenges appear.
In return, they expect the government to provide some measure of certainty and stability. So it is only right that when the government took the extraordinary but correct decision to put the country into lockdown, and order all but the most essential businesses to shut down for an unspecified length of time, that there would be support for small businesses put in place to ensure they could see this period out and be ready to re-open when the lockdown is lifted.
But there are real problems. By the end of last week, only 16,600 companies had their loan applications approved, with just 9,000 of those having actually received the money.
That’s from a total of almost six million businesses who can qualify for this support.
A major reason for this sluggishness is the requirement put in place by the Chancellor that banks must guarantee 20% of any loans, requiring them to go through their usual lengthy checks.
This is not good enough. The risk is that perfectly viable businesses who we all need to play a vital part in getting our economy back on track after the lockdown won’t be around to do so.
Small businesses who are watching their cashflow dwindle to nothing can’t wait around for approval.
The Labour Party has committed to work constructively with the government throughout this crisis, supporting them where needed and holding them to account when we think they’ve got something wrong.
This is one of those situations where we need the government to go further and convert their intentions to save our small businesses into real action.
Thanks to this approach, we have already seen some movement from the government. On Monday, the Chancellor announced new loans for small businesses of up to £50,000, 100% guaranteed by the government, in an attempt to take that major roadblock out of the system.
It will come too late for too many of our small businesses, but it is another important step.
And the government must do more. Too many self-employed workers are falling through the gaps of these schemes.
Those at risk of unemployment must be protected further by making the employee furlough scheme more flexible.
Universal Credit rules need to be changed to help those already put out of work, particularly by turning loans into grants, and there needs to be serious money put in place to develop retraining and redeployment schemes to get them back into work as soon as possible once this crisis is over.
Here in Wigan we know what happens when a government shrugs its shoulders as the entire local economy of a town is put at risk.
The time is now for government to work with businesses, trade unions and local authorities to ensure we all come out of this without having to deal once again with the same long-term scars inflicted by the pit closures.