Prime Minister promises relief as small firms fight for survival

Seven Budget moves that could rescue Britain’s microbusinesses

The Prime Minister has promised to “make life easier” for businesses and says he is “acutely conscious” of the pressures they face. Britain’s microbusinesses now need more than warm words. They need lower hiring costs, simpler taxes, affordable energy and regulation designed for firms without departments full of experts.

TACKLING THE COST OF DOING BUSINESS

The Prime Minister has promised to “make life easier” for businesses ahead of his first Budget. He says he’s “acutely conscious” of how hard the environment has become for businesses. We hope he also understands how it has become particularly hard for the 99.2% of the businesses in the UK that are micros.

After a decade in which government policies pushed business costs up 70%, microbusinesses, are struggling most, in a soup of regulations, reforms, and rising costs, and are particularly anxious that he should get this right so they can grow and thrive again.

Crisis mode

Microbusinesses (0–9 employees and especially the even smaller 0-5 businesses) are being hit from every direction from the well documented energy bills and rising insurance premiums to those diabolical employer NICs and the increased wage and business rate costs.

If you add into the mix the new regulations around employee rights and Making Tax Digital it’s easy to see why firms are shutting up shop. Materials and stock are going up in price at the same time as consumers have less money in their pockets and there’s the outline of the perfect storm.

While the Government will be hard pressed to tackle all of those costs, there are a lot of policies that have added to the business burden, and could be reformed again to the benefit of micro businesses.

These firms don’t have finance teams, HR departments or cash buffers. They feel every policy change immediately. The PM doesn’t want to “make life harder”, but microbusinesses need structural change or life will become unmanageable.

Instant impact

Employer National Insurance Contributions are the UK’s most punishing tax on recruitment and jobs. Reducing them would make it cheaper to take on young workers (which is a big worry for Government), support the Youth Jobs Guarantee, boost apprenticeships and help tackle the LEETS crisis where nearly a million young people are looking for employment, education and training. A targeted NICs cut for microbusinesses would have and immediate impact for businesses and jobs. Businesses can’t grow without the right people and people can’t get jobs if businesses can’t grow.

Fix energy costs

Households have a price cap (even though it’s going up shortly) and businesses don’t.

Microbusinesses need reforms to the standing charge, long‑term fixed tariffs and support for the new plug-in and for rooftop solar panels to bring down bills. They also need protection from out‑of‑contract rates, fairer grid charges and simplified switching between suppliers. The PM may have a long-term ambition to take some “public control” of utilities, but microbusinesses need lower costs now.

Simplify tax

HMRC says businesses spend £15bn a year just complying with tax rules. For microbusinesses, this is often the difference between survival and closure. They need a tax system that is proportionate for them, not the one-size-fits-all approach of a system that was built for big business. The budget needs to address quarterly reporting, streamline VAT, cut corporation tax and reduce admin for micros. Tax simplification is one of the best ways to boost microbusiness productivity. It’s been tried and abandoned, but that doesn’t mean this Government can’t succeed where it’s failed in the past.

Reform business rates

Microbusinesses need lower rates for high‑street independents, fairer valuations, relief for small premises and reform of the “cliff edge” thresholds.

The Government’s hospitality rates review is a start but microbusinesses across all sectors need reform.

Cut insurance

Insurance premiums have risen 30–60% for many small firms due to drought‑driven subsidence, flash flooding, supply chain costs and higher rebuild prices

Microbusinesses need a small‑business insurance code, fair pricing rules, transparency on exclusions and support for climate‑related risks. If the Government doesn’t step in, insurance will become unaffordable for thousands of firms and has already become unaffordable for all but the legally required policies like vehicle and employers’ liability cover.

Regulatory drag

Microbusinesses struggle with employment law changes, holiday and sick pay rules, GDPR compliance, health & safety requirements and licensing and sector‑specific rules, to name but a few. No one is suggesting we get rid of the obligations on micro businesses to protect their employees but it can’t be impossible to come up with a lighter touch, proportionate regulatory regime with simpler, clearer rules for firms under 10 employees. That could really make a difference to the hours spent on admin and boost productivity without removing protections. Small businesses are not ‘big businesses only small’ and we need understanding at policy maker level of how small and micro businesses operate.

Boost EU trade

The government has regularly talked about the need to improve EU trade and that it could “add percentage points” to UK growth. For microbusinesses, this means simpler customs processes, reduced paperwork, lower courier costs, easier movement of goods and clearer rules for services. Small exporters have been hit hardest since 2020 and fixing this unlocks growth. Implementing the Electronic Trade Documents Act passed a couple of years ago could really help small businesses export and import.

The big fix

The PM wants to “make life easier” for businesses. For microbusinesses, that means avoiding new tax hikes and reversing 2 decades of rising costs. To tackle the cost of business crisis significantly, the budget will need to deliver:

• lower employer NICs

• fairer energy costs

• simpler tax rules

• reformed business rates

• reduced insurance costs

• lighter regulation

• and better EU trade.

It’s a long list and realistically it isn’t going to be possible to do overnight, but the PM needs to act rather than just use reassuring words. If he does follow through and do these things, microbusinesses will have the certainly that gives them the confidence to hire, invest, innovate, create jobs, survive and drive local growth.

Ignore the list and the UK’s most vital employers, the microbusinesses that can power growth in every postcode, will continue to struggle and sink below the surging waves of admin and costs.