Government urged to boost SME support fund
The cross-party UK Trade and Business Commission has urged the government to increase funding for small businesses hit by post-Brexit red tape, after hearing evidence from firms struggling to adapt to the UK’s new trading relationship with Europe.
In its first set of recommendations since launching in April, the Commission also called for the appointment of a dedicated minister for SME trade, and a single portal for small businesses to access advice on international trade.
It comes after it emerged that businesses have so far only managed to apply for £4.3m of the government’s £20m Brexit support fund, which is due to close at the end of the month. The Commission is calling on the government to significantly increase the budget of the SME support fund and loosen its eligibility criteria, to ensure businesses can access the financial support they need.
The recommendations were made in a letter to Cabinet Office Minister Michael Gove signed by all the Commission’s members, which include MPs from each of the main Westminster parties and leading business representatives. It requests a meeting with Michael Gove and Lord Frost to discuss the Commission’s proposals and evidence it has received so far.
The Commission, whose secretariat is provided by the pro-internationalist group Best for Britain, held an evidence session with small businesses on 27 May to discuss the impact of new barriers to trade with Europe. Small firms at the session warned that post-Brexit red tape was threatening the viability of their businesses and demanded urgent action to protect future investment and jobs in the UK.
Hilary Benn MP who co-chairs the UK Trade and Business Commission said: “The heartfelt testimony we’ve heard about business being lost, extra costs and complex bureaucracy is the clearest sign that our new trading relationship with Europe is not working for many small businesses.
“SMEs account for three fifths of the employment and around half of turnover in the UK private sector. They are in urgent need of assistance and these recommendations are the first step.”
Naomi Smith, chief executive of Best for Britain said: “Business owners are rightly angry that while the Government are ready to put up £200 million for a new yacht, SMEs have been offered £20million to cope with costly Brexit induced red tape, equating to a paltry £30-£40 per business.
“The government’s thin agreement with the EU is not equipped to deal with the complexity of modern trade and SMEs are in desperate need of help. The Government must act on these recommendations now to save jobs.
Case studies
Jin Talog
Jin Talog is an organic gin distillery based in Carmarthenshire. Since the transition period ended, they have found that increased duty and courier costs have made their product uncompetitive in what was once an expanding market for them within the EU. As both importers from and exporters to EU countries, Jin Talog are being hit twice by an increase in costly red tape.
David Thomas, founder of Jin Talog said: “Sending gin to the Netherlands used to be as simple as sending it to Northampton but sadly this is longer the case. We’ve already had large orders from loyal customers in the EU cancelled due to increased costs and delays caused by red tape are damaging our brand. The EU was a growing market for us and so far, orders from other countries fall far short of covering this loss. We are coping as best we can, for other Welsh businesses it will mean the shutters come down permanently.”
Foxglide
Foxglide is an Ayrshire based sportswear manufacturer. With manufacturing and half of their customers based in Europe, they have taken the decision to relocate all operations to the EU.
Alan Mitchell, founder and company director of Foxglide Sportswear said:
“It’s a decision we took a while to make as we hoped things would get better but shouldering more red tape, and more costs to import and export via the UK does not make sense when we manufacture in the EU and sell to Europe in such large quantities. It’s sad because our preference is definitely to stay in Scotland where we currently pay tax and develop our sales team.”
Flourochem
Fluorochem, employ 50 people in High Peak, Derbyshire. For 50 years have supplied chemicals for research and development mainly across Britain and Europe including to manufacturers of Covid vaccines. They spent approximately £250,000 on new IT systems and will now have to make similar investments in other countries to retain their EU client base
In his oral evidence to the Commission, Lee Jones, managing director of Fluorochem, said: “We’ve investigated every possible solution…In a nutshell if nothing is resolved this year, because we cannot afford to sit around and wait for things to potentially come up in twelve months or two years, we will relocate. It is impossible to remain competitive in Europe by shipping from the UK using the current methods… It’s an absolutely crazy system.” Mr Jones went on to recommended that a dedicated minister of trade for SMEs would be required to help.
