Dear chancellor, rescue (or at least reply to) the swathes of limited company directors forgotten amid covid-19
If there was ever a time when limited company directors appeared to be totally forgotten by a government giving out support to help people through the ongoing covid-19 pandemic, it was on Thursday at the chancellor’s Winter Economy Plan, writes Kate Solomons of Forgotten Ltd.
But first, let’s step back to before Rishi Sunak’s statement. We were not surprised when Autumn Budget 2020 was delayed and actually, we were hopeful that this meant that the chancellor would, after six months without helping them in any meaningful way, announce a financial support package for small limited companies.
After Mr Sunak took to Twitter to state that “people want to see us focused on the here and now,” millions of small business owners were cautiously optimistic that the update, in the shape of his Winter Economy Plan, would mean support for those who had previously fallen through the gaps of the government’s covid-19 income support packages.
We see mass limited company closures
Sadly, this has not been the case. The Job Support Scheme at the centre of the plan unveiled on Thursday is of course necessary to help protect jobs. Yet disappointingly, no support was forthcoming for small businesses to provide access to either personal income or meaningful support for their business. Instead, what was announced falls far short of what is needed to prevent what we foresee -- an oncoming wave of mass unemployment, and the closure of thousands of small limited companies.
Under the Job Support Scheme (JSS), when a business brings someone back to work on a third of their original hours, the business still has to contribute a third of the wages for hours not worked. The business would pay over half of a worker’s original wages while they work only a third of their original hours. For those businesses who have received little or no support for six months, this is nigh on impossible to achieve -- there are no reserves left to pay for employees within the small limited company community.
Our messages to you chancellor
Mr Sunak, you must know this and you ought to realise that any expectation that limited companies can meaningfully benefit from the JSS is unrealistic.
Let’s reiterate so the chancellor can be in no doubt.
Mr Sunak, the owners of small limited companies (just like the newly self-employed) almost entirely missed out on your coronavirus support packages after the government’s initial lockdown, and they have faced many months of financial devastation.
These incorporated businesses now face an extremely bleak winter ahead, unless the government steps in and provides financial support. Many will not survive -- resulting in more job losses, a loss to local economies, a further strain on the benefits system, and the appalling toll that the situation will have on the mental health of business owners, and their loved ones.
We speak with people every day who having gone from focusing on getting orders or commissions as part of running their limited liability business, to now having to sell their cars and homes. They currently use food banks to feed their children and turn to charities to help, notably with the unparalleled stress and suffering caused by this terrible situation of no proper support during a health crisis and a financial crisis. Is this how a government should be treating their tax-paying constituents?
Chancellor, you defended your recent decision regarding the conclusion of the furlough scheme, saying there was “no harder choice” than to end it. But then on Thursday, you said the government now needed to support “viable” jobs with your new measures. You further announced that “it is fundamentally wrong to hold people in jobs that only exist inside the furlough.”
Second wave? First proper support for contractor companies would still be welcome
Yet millions of now-ForgottenLtd individuals ‘had’ viable businesses before the government forced them to close. The coronavirus lockdown requirement from the government and its subsequent lack of support over the past half year has forced these viable businesses to their knees. Incorporated business-owners have used monies in their businesses, their personal savings, credit cards, loans, anything they can; to try and stay in business.
Chancellor, with many businesses still unable to reopen and the absence of financial help for the very people who employ 7.5 million people in the UK, this short-sighted lack of lifeline remains unjustifiable in place, just as the next wave of unemployment is set to engulf the economy.
Also Mr Sunak, you promised to be “creative and innovative” in response to the unprecedented economic crisis caused by this national and global pandemic. If your aim is genuinely to save jobs, then you must come up with further measures to support small businesses, to save jobs, protect local economies, invest in retraining and ensure that the vital support is addressed for the ForgottenLtd who have not been able to access the funding needed to save their livelihoods.
Please right this wrong chancellor, but at least reply
A further lifeline needs to be in place for industry specific sectors, such as Events, Hospitality, Weddings, the Night-Time economy, among many others, which are all still unable to trade in any substantive way until 2021.
Lastly chancellor, you might like to know -- we’re not alone. Our #ForgottenLtd campaign has worked (and will continue to work) with numerous leading business organisations, including the Federation of Small Business, to create alternative support options for Personal Service Company (PSC) directors. And our campaign has now sent both your Treasury and the business department (the BEIS), a detailed ‘Rescue Package’ for limited companies.
It contains a number of policy suggestions to help show you, HMT and other policy-makers that there are lots of other ways you can provide the vital economic aid that the owners of small limited companies are crying out for. To date, we have received no response. Mr Sunak, a start to righting this wrong for so many hard-working business folk across the country, fighting the impacts of covid-19 on their own, would be to reply today.