“A pivotal budget” is how Bhatti, new chair of the small business APPG, put it. The aim of the Budget was to support people and businesses, fix the public finances and build the future economy.
The reason for optimism, Bhatti said, is the vaccination programme – in his opinion, a matter of great pride for the nation. He reminded attendees that the Budget came as the economy took baby steps into reopening, but at a time when balance sheets have been decimated by debt and workforces lie in the balance. There are still skills and productivity gaps – but also opportunities if both government and business get the recovery right.
To realise this potential and to inform his new role as Chair of the All-Party Parliamentary Group for Small and Micro Businesses, Saqib Bhatti MP was hosted by ICAEW in a virtual meeting of both small businesses and practitioners advising small businesses.
The first issue raised by members was the role of the Local Enterprise Partnerships (LEPs) in recovery. Bhatti commented that it always has been, and always will be, important for business leaders to make themselves heard so they can lead in identifying local niches with the aim that those niches (or clusters) become the subjects of investment and support. It is for business to drive the agenda, he urged.
Bhatti was also clear that clusters of expertise within the same sector and in the same location should develop organically, but it is for the LEPs to map those clusters, understand their value propositions and develop support measures to unlock opportunities, such as innovation and acceleration projects.
There were questions voiced by members about the future of the government’s Industrial Strategy and its implications for UK trade.
In response, Bhatti turned to the Trade and Cooperation Agreement between the EU and the UK in December 2020. He recognised that details on how it should be implemented are still being worked out but pointed out that trade problems hindering UK businesses also hinder EU-based businesses. There is a commonality in this respect, and a common urgency. He said that business-led solutions are needed.
He talked of the 63 trade agreements that have already been signed and pointed out that the UK has applied to join the Pacific free trade area, CPTPP, thereby deepening trade ties with some of the fastest-growing markets in the world. The opportunities lie in new markets, he said, and an urgent focus on exporting to unlock growth, led by the Department for International Trade.
For many SMEs and their professional advisers, it is still early days to be looking to new markets when they are feeling the pain of the pandemic. This was reflected in the significant amount of time spent discussing issues around finance.
One member pointed out the funding gap, specifically in the £25,000-£50,000 range, that hinders some entrepreneurs getting that all-important start-up opportunity. Bhatti said diversification of funders is the answer to these types of funding gaps and emphasised the need to get funding to the regions to meet the levelling up agenda.
Funding gaps aside, there are also concerns amongst SMEs and their professional advisers about the situation in which early adopters of CBILS loans will find themselves as they approach the end of their 12-month payment holidays. Will those borrowers find themselves being approached by the banks’ distressed assets team? How will things pan out for them?
Bhatti urged members to feed back to government – through ICAEW – on these cases. He said it is important for the government to understand how CBILS and other relief mechanisms translate into the realities of the market.
In terms of the bigger funding questions – largely around the end of EU funding and the way in which UK regional funds will be financed going forward – Bhatti commented that constructs like the Northern Powerhouse, in his view, will need long-term funding and that this requirement is not lost on government.
Looking forward, start-ups, innovation and support are very much on the agenda. He pointed out that the Chancellor and a multitude of MPs are driving this effort, but it is not for government to pick winners, rather it is about creating the optimum ecosystems in which start-ups can thrive.
There are many other issues to address too. Amongst those, the high street needs re-imagining, there is the government’s Ten Point Plan for a Green Industrial Revolution to implement, and there are concerns about mental health to address. There is much to do.