The Budget Is Coming – But Small Businesses Are Running Out of Road – by Liz Barclay

           

In the run-up to the 26 November Budget, small business owners across the UK are holding their breath. It’s not because they expect good news, but because every fiscal decision now feels like another turn of the screw. The mood is anxious, tired, and worryingly quiet. When small firms stop shouting, it’s usually because they’re too busy firefighting to spare the energy.

And governments need to remember: these are voters too.

Before we talk numbers, we need to talk people. When politicians debate “small businesses”, it sounds like an abstract concept and an unknown entity. It’s neither. It’s people.

It’s the woman who opens her café at 6am and goes home after the tables are wiped, the books done and the rotas sorted.

It’s the electrician who hasn’t had a holiday in three years because he can’t afford to turn down work.

It’s the childminder who sends her invoices at midnight and fills in insurance and safeguarding forms after putting her own kids to bed.

It’s the owner of a care agency who covers night shifts herself because she can’t find enough skilled employees.

These people are our high streets, our plumbers, our florists, bakers, hairdressers, car mechanic. They employ our neighbours, give teenagers in their first job, keep elderly relatives safe, boilers working, small towns alive. When they struggle, communities struggle. When they close, opportunity closes with them and the social value they add in their local areas is lost.

Right now, they are struggling.

This Budget comes at a breaking point. The rise in employer National Insurance earlier this year, from 13.8% to 15%, coupled with the threshold drop from £9,100 to £5,000, means the café, care agency, cleaning service or workshop is paying hundreds more per employee. Add the higher National Living Wage of £12.21 for over-21s and you have payroll costs rising 10% or more almost overnight. I’m speaking to owners who’ve stopped taking a salary, not because business is booming, but because they’re trying to shield their employees from the impact of rising costs.

Policymakers don’t seem to understand that when you run a micro business, every cost lands directly on your kitchen table. There’s no finance department to hunt for efficiencies, no HR team to manage compliance, no legal counsel to interpret new rules. You absorb everything yourself. and at the moment, the shocks are relentless.

Employment costs are rising. Rents and business rates remain stubbornly high. Insurance premiums have jumped. Late payments are costing the economy £11bn a year. Paperwork has become so crushing that many owners spend more time complying with rules designed for large employers than serving customers. Meanwhile, customers themselves are tightening their belts.

Taken together, these pressures have pushed the sector into survival mode and confidence is on the floor.

A budget is a chance to restore confidence. This one must be more than a headline moment. Small firms need clarity, consistency and certainty. That builds confidence leading to investment, increased productivity and the growth the government craves. The reality is stark: if this Budget misfires, we will see more closures, more redundancies and more high streets hollowed out.

We need a rethink on employer National Insurance. Raising wages is a good ambition, but pairing a higher National Living Wage with higher NI contributions and a lower threshold is squeezing the very employers who can least absorb it. A targeted NI relief scheme for micro employers in low-margin sectors could prevent job losses.

We need meaningful business rates reform. Reliefs help some, some of the time, but the system still penalises bricks-and-mortar businesses based on outdated property values, not the reality of their turnover. A café taking £80,000 a year shouldn’t pay rates comparable to a chain taking millions.

We need urgent action on overdue payments and poor, ;omg contractual payment terms in contracts, Big customers sitting on cash while small suppliers wait months to be paid is destabilising thousands of firms. Tougher enforcement and transparent reporting of accurate data on payment performance would stop bigger businesses using smaller suppliers as banks.

We need a serious reduction in the administrative burden. Right now, paperwork is a hidden tax on growth. A single, easy-to-use digital portal for tax, reporting and regulatory guidance designed with small firms, rather than imposed on them, could save days, and possibly sometimes weeks, of time each year which could be used to work on growing the business.

Small business owners aren’t asking for special treatment. They just want a fair chance to survive. They want rules that reflect reality, support they can access and apply before they reach before crisis point, and a system that recognises them as the people they are, not footnotes in an economic plan.

The danger now is that they start making the only decisions left to them: not hiring, not investing, and in too many cases, not continuing. I speak daily to owners who no longer replace people who leave, because the risk is too great. Others are switching employees for freelancers to avoid crushing NIC costs. Some are cutting their opening hours because they can’t cover shifts and payroll at the same time. Others are taking home next to nothing leaving the household unable to pay the bills.

These warning lights are flashing red! This Budget won’t fix everything, but it can signal understanding of the reality for millions. It can offer relief where it is most needed. It can shift the tone from “one-size-fits-all” to something that recognises how small businesses genuinely operate.

If the government wants growth, stronger communities and a resilient economy, it must show, clearly, that it understands the real people behind the numbers. If small businesspeople thrive, the country thrives. If they continue to be pushed to the brink, we will all feel the consequences.

Now is the moment to give them a fighting chance