A new report reveals the cost of Covid-19 to small businesses now sits at £109.6 billion, two years on from the UK’s first national lockdown – with one in six believing they will never recover financially from the pandemic. The study by small business insurance specialist Simply Business reveals that 87% of small business owners have lost money over the last two years, averaging £20,981 each in total, with many still suffering financially. With one in six small business owners believing they will never financially recover from the pandemic, this represents almost one million UK small businesses in total. While others are more confident of eventually recovering financially, the outlook remains bleak, with 43% of owners saying it will take at least another year. What’s more, one in five (21%) don’t expect to ever return to pre-pandemic trading levels. Despite one in six (16%) believing that their business is now better prepared for the future following the events of the last two years, small business owners are now facing a unique set of challenges as we continue to emerge from the pandemic. While Boris Johnson’s lifting of Covid restrictions earlier this year was predicted to give business a boost, 31% believe things have in fact got harder since the restrictions ended – with 63% believing that the government hasn’t offered enough financial support, consultation or communication in the period since. Furthermore, as Covid cases rise again in the UK, two in five (38%) small business owners are concerned about another lockdown and tighter restrictions, which would impact trade exponentially for a third consecutive year.  Two fifths (40%) say they are ‘not at all confident’ about their preparedness for a further lockdown or tightening of restrictions, and what’s more, a worrying 42% predict the temporary or permanent closure of their business should the UK enter another lockdown. There is however, a glimmer of hope amongst nearly a quarter (23%) of SMEs who have strong faith in their ability to weather another lockdown.  Alan Thomas, UK CEO at Simply Business, said: “Two years on from the UK’s first national lockdown, the continued impact of Covid-19 on small businesses is clearer than ever. With owners losing almost £21,000 each on average, one in six believe they will never recover financially from the pandemic. “For small businesses, there’s no doubt that it’s been a period of incredible difficulty. But it’s also been a period of resilience, innovation, and creativity, where the unique spirit of the UK’s self-employed community has once again been clear to see. “Accounting for over 99% of all UK businesses and contributing trillions of pounds in turnover every year, small businesses sit at the heart of our communities and are vital to our economy. As the types of challenges facing small businesses evolve, it’s essential that we all play a role in supporting their revival over the coming months and years. “From local bakeries and greengrocers to contractors and tradespeople, if the UK is to recover from the effects of the pandemic, we need small businesses to bounce back.”

2021 was an “exceptionally productive year for NEXT,” according to its chairman, as the company “worked hard to adapt and develop [the] business to enable [it] to maximise the opportunities of an increasingly online world.” According to results for the year ending January 2022, profit before tax grew to £823.1m, up from £748.5m in 2019/20 and £342.4m in 2020/21. Meanwhile the business posted total group sales of £4.8bn, up from £4.3bn in the year to January 2020 and £3.6bn in the year to January 2021. Looking ahead, following the closure of websites in Ukraine and Russia, and after moderating growth expectations in some other overseas territories, NEXT have lowered sales guidance for 2022/23 by £85m and profit guidance by £10m. A statement from Michael Roney, chairman, says: “I am very proud to see how everyone within the business has embraced our challenges, opportunities and ambitions. I would like to thank them for this, and also for the continued commitment that they have shown over the past two years whilst having to deal with disruption to both their work and personal lives due to the pandemic. “We enter 2022 with confidence in the outlook for our business and its ability to continue its successful evolution. The effects of the pandemic are ongoing and we remain mindful of macroeconomic and geopolitical risks, but our continued investment over many years in our people and our systems has generated strong and resilient results in the past year and we believe that it will continue to do so.”

  James Pinchbeck, Partner Streets Chartered Accountants: The government has been reprimanded for releasing details of Budgets and Statements in advance of their hearing in the House. It would seem then such advice was heeded in the case of the Spring Statement, delivered in the House on 23^rd March 2022. Little was known of what we might hear in advance. Though perhaps some may feel there was nothing to release or leak? At a time of rising inflation and living costs, for many younger workers and households, it is something they will not have experienced in their lifetime and many will have listened to the Chancellor with baited breath for measures and support to ease the burden. Whilst many were urging the Chancellor to use the Spring Statement to axe the health and care national insurance increase due to come in this April, few probably really thought he would and he didn’t. In terms of support for all households facing increased costs of living, he announced a 5p reduction per litre in the fuel duty levy from 6pm. This will no doubt be welcomed by those reliant on their car for work, particularly those living and working in rural areas where alternative lower cost travel options are not always available. Whilst we head towards the warmer months, few though will take their minds off increasing energy costs with the price cap hike due to come in from April. The number of people who can benefit from the news of the removal of 5% VAT levied on the installation of renewable energy including heat pumps, solar and wind etc, will probably be limited and lagged in their benefit for most. The Chancellor also announced an increase in the Household Support Scheme with a further £500m of support being available to local authorities to target assistance to those affected by energy price increases. When it comes to managing rising energy costs for businesses, again the measures announced were limited in that they failed to address the issues currently faced. Supply chain issues, labour shortages increasingly giving rise to price rises for consumers and energy price rises are all key contributors to overall price rises faced on goods, especially food and other key household items. His help with energy costs for businesses was limited to removing business rates due on a range of green technology used to decarbonise buildings, including solar panels and batteries, whilst eligible heat networks will also receive 100% relief. So looking at how the Chancellor sought to balance managing the economy, public debt and borrowing whilst seeking to promote growth and to help those, if not all, affected by rising living costs, what were the key announcements? In the here and now, or at least to have a more immediate benefit was the announcement that the threshold at which National Insurance Contributions are levied will rise by £3,000 to £12,570 in line with the Income Tax Threshold. The Chancellor declared that this represents a £300 tax cut for those who will benefit from the change from July 22. This threshold increase is believed to benefit some 70% of the workforce and should help to mitigate the increase due to come with the new National Insurance health and care levy. When it comes to help for businesses, the Chancellor served up a lukewarm helping of reheated announcements made previously with support around reductions in Business Rates, stating he would introduce reliefs a year earlier in April 22, through his Help to Grow initiatives and a continued focus around innovation through Research and Development tax reliefs. He did however offer support to employers, from the 6^th April, through an increase in the Employment Allowance from £4,000 to £5,000. This allows smaller businesses to reduce their employers National Insurance contributions bills each year. As his Statement came to an end, the Chancellor’s final announcement was on the proposed reduction in the basic rate of income tax from 20% to 19% before the end of this Parliament. Perhaps with a sense that this Statement was one based either on Government seemingly becoming a little jaded, running out of steam, or facing the challenges of dealing more and more with issues in the here and now as opposed taking a more longer-term perspective. With recent media coverage we might be forgiven for thinking that it was a statement that marks the start of a government laying the foundation and making preparations for a general election perhaps even as early as next year.   Further details on the announcements included in the Spring Statement 2022 along with tax changes for 2022/23 are included in Streets Chartered Accountants – Spring Statement report. https://www.streetsweb.co.uk/resources/2022/mar/24/streets-guide-spring-statement-2022/

Robinson, the custom manufacturer of plastic and paperboard packaging, has slipped to a pre-tax loss after experiencing “very challenging conditions throughout 2021 across input price inflation, customer demand and the ongoing uncertainty resulting from the COVID-19 pandemic.” According to audited results for the year ended 31 December 2021, revenue grew 24% to £46m, up from £37.2m in 2020. Despite this, the Chesterfield-headquartered company posted a loss before tax of £0.1m, in comparison to a £1.8m profit in 2020. Robinson, whose origins date back to 1839, launched a “modest restructuring programme” in November, to deliver £0.3m of cost savings annually. Alan Raleigh, chairman, said: “The Robinson business has experienced very challenging conditions throughout 2021 across input price inflation, customer demand and the ongoing uncertainty resulting from the COVID-19 pandemic. “The substantial uncertainty and volatility experienced in 2021 is likely to continue through 2022, with further inflation in input costs anticipated. “As a result of the inflation already experienced in 2021, we are seeking substantial price increases from all customers, which will support the improvement of margins in 2022. Given the ongoing pressure on input prices the board will continue to prioritise the management of fixed costs in 2022. “It is likely that the consequences of the Russian invasion of Ukraine will remain for some time. Whilst we cannot foresee or fully quantify the impact, we are closely monitoring the situation, we will drive profitability, conserve cash and respond as necessary across our geographical locations. “Despite the ongoing uncertainty, profits in the 2022 financial year are expected to be ahead of 2021 and we remain committed in the medium-term to delivering above-market profitable growth and our target of 6-8% adjusted operating margin.”