Thousands of independent businesses face imminent collapse due to ‘a huge debt mountain’ of unsustainable loans taken out during the pandemic.
This is the conclusion reached by a panel of industry experts headed by Bill Grimsey, former chief executive of Iceland and Wickes, in a far-reaching report that has just been published.
Among the headline findings, the report discovered:
- the collective debt of the country’s 68,000 small independent retailers has risen from £0.25 billion to £1.03 billion since the start of the pandemic;
- among the country’s small independent hospitality businesses, debt has risen from £0.19 billion to £0.84 billion; and
- the overall debt level of independents has more than quadrupled in the past year, with firms now owing £2.2 billion, up from £0.5 billion.
Mr Grimsey has called on the Government to introduce a series of reforms and aid packages to safeguard businesses, stating: “There are almost 150,000 small independent businesses out there that face five times the debt they had going into the pandemic…there is going to be a significant number of business failures and a large part of that debt will default. These people need urgent help and understanding and should be seen as a critically important cohort of independent businesses at the heart of communities up and down the country."
He added: “For too long we’ve viewed independent shops in the latter camp and it’s time they gained the respect they deserve. Research shows that their role is very much the glue holding communities together. Having survived the worst public health crisis in a generation, their loss would be catastrophic for communities. If they were to go under now, it would not only be the small independent business owners that would suffer from business failures, it will hit the people they employ, the companies that supply them and the landlords of the properties they occupy.”
The report recommends a series of measures including:
- wholesale reform of the business rates model and an extension of the business rates holiday for all non-essential retailers, hospitality and service providers until April 2022;
- a 2% sales tax at point of sale to replace business rates – it would be easier to administer and would raise the same amount;
- HMRC to play a constructive role in business rescues;
- councils to provide knowledgeable and experienced specialist business support for their independent retail and service sectors with incubator space; and
- revamping the Government’s current ‘Levelling Up’ programme, which requires towns to compete for support from a multitude of funds and creates winners and losers, with the losers dubbed ‘Left Behind Towns’ in the report.
The full report can be accessed here.