“I Tip My Hat Top Anyone Running Businesses at This Particular Time” – Small Business Minister

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Paul Scully MP, Minster with Responsibility for Small Business (SME's) talks to Steven Mather for his podcast The Business Herald and YBKBS Small Business News for Smart Business Owners
Paul Scully MP, Minster with Responsibility for Small Business (SME's) talks to Steven Mather

Two weeks ago I was delighted to speak to Paul Scully MP, Minister with Responsibility for Small Business. It was recorded a few days before the Budget March 3rd.

You can listen to the full podcast by hitting the button below to get the full context of the conversation. Below are edited highlights of the interview, where we talk about funding, who they’re really talking about when it comes to small business and what their position is on the 3million small business owners currently excluded from the Government support during the Pandemic.

Steven Mather

Steven Mather

Business Lawyer and Author.

One of the countries leading litigation lawyers in the UK with 13 years experience and counting.

The Interview

SM: Some business owners bemoaning that they’ve got another two months of closures for many. So many of those small businesses are struggling because they’ve not been open for such a long time. What do you say to those having to wait for at least another couple of months before they can claim any help? 

PS MP: So I hope, that as the Prime Minister described it, most businesses will accept the trade off between haste and certainty. What we’ve tried to do with the roadmap, and I fed in some of my sectors discussions and reflections, is to make sure that it’s irreversible, and we don’t go back to the stop and start that we had last time, which in itself was damaging for a number of businesses in various sectors. But we’re in this slightly odd,  difficult time at the moment because we’ve only had one half of the jigsaw puzzle. The second half comes with the Chancellor reflecting on the public finances in the budget on the, on the 3rd of March. Not only does he have to work out (things for) business, but obviously he has to see the other public sector side.

Paul Scully MP - Minister with Responsibility for Small Business

So there’s more to come, but hopefully when businesses see that, they will see that it’s a steady stream of opening and working through the gears. I’m glad that the Prime Minister has looked at people’s wellbeing in this reopening as well, in allowing things like having beauty to open earlier than they did last time, which helps people’s mental wellbeing, but also gyms as well and sports too, to give people a sense of physical wellbeing and obviously greater ability to mix and socialise as well. 

SM: One of the key issues that most small businesses raised with me was that there’s been a number of people that have been overlooked by the government in terms of support. The number of businesses that were in their first year of trading, for instance, those that didn’t have any properties, they weren’t able to complete any grants.There’s been a lot of people that have not had access to that support. And also there’s the ExcludedUK type movement of further more people, the directors of small companies, or directors of companies where they don’t have more than 50% of their income from self-employment or through their company.

But there’s been a gap of that hasn’t been covered. Why is that and is there a way to support those businesses moving forward or is it just a matter of them throwing in the towel and go and get jobs?

PS MP:  I hope people don’t throw the towel in, but I do recognise that unfortunately we are seeing redundancy, we are seeing unemployment increasing but I think we we’ve given out some of our £285 billion worth of support so far in terms of the furlough, the self-employed scheme, the grants, the bounce-back loans, CIBLS schemes and business rates relief. And these are all the big schemes that we had to wrap our arms around the economy to deliver huge, huge gains, affecting a lot of people at pace. And that’s Government working about as real-time, as you’re ever gonna get to see frankly. 

I used to be self-employed, running my own businesses for 20 odd years, so I’m used to being nimble, but Government is like that big juggernaut.

So the fact that we were consulting on things, sometimes in terms of hours on Sunday with business representatives, and representative organisations and unions and the like, whereas normally that would take months and sometimes years. But they were all reverse engineered from various schemes. So the furlough was based around payroll. The self-employed scheme was based around the tax. The grant scheme was based around business rates. It was reverse engineered from that for ease of disbursement, but also to make sure that we could address the necessary checks that we had to put in, because it was public finances, its taxpayer’s money at the end of the day. And so that didn’t mean that there weren’t cracks and there were people that fall in between the cracks. We tried to remain flexible across the last year as well, changing some of the schemes as we’ve listened and responded to businesses and to grab some of the people that you describe, unfortunately, we’ve not been able to grab everybody within that, but we’ll continue to flex. But at this stage, I think we are at a point where reopening the economy is the best way, I think, of getting people back on form, whether you’re self-employed, whether you are a new business. Hopefully to get, allow you to welcome back customers in a safe, but in very, very warm way.

SM: There’s going to be a number of businesses that are just not going to be able to reopen that wasn’t there because they’ve not had that support over the last 12 months, effectively. Those businesses have necessarily had to stop and close that don’t have support. And so they probably have gone on to do something else, funding them, finding a job just to carry on earning some money or even maybe go into universal credit to get by.

PS MP: Well, yeah; Universal Credit has always been that safety net that has been there. The self-employed grant, I accept what you said about, people that have got new businesses or have ‘X’ amount of percentage of their income from self-employed, if it’s less than 50%, but a number of people have been able to continue working with that grant and go off and do other things. As well as the furlough scheme, slightly different, because you have to literally furlough yourself; you have to stop working unless you’re a company director and you can do the statutory bits of, of running your business. But what we’ve found is that a number of businesses have pivoted. 

What about the 3million that are Excluded?

So yes, unfortunately there are businesses that are falling by the wayside and it’s really regrettable. It’s really horrible when I’ve lost a couple of businesses in my twenty-five years. And that’s in normal, relatively normal times. Not as extraordinary times, I tip my hat off to anyone running businesses at this particular time. 

But we’ve also seen businesses set up. Businesses set out weeks before lockdown and they’ve tried to adapt as best they can. And you’ve had other businesses that have either found they run out of road in many ways or actually seen other opportunities. So they pivoted in a different direction. And I really want to make sure that as ‘furloughed’ was the business word last year, I want ‘pivot’ to be the business word this year too, because it really does reflect the adaptability of so many businesses around the country, self employed and small businesses.

SM: It has been a pretty key word in small businesses this year as well, but I think it will carry on being relevant over the next 12 months, there was a report that I picked up that said that there’s still 300,000 people or businesses waiting for the bounce back loans. And, and these I guess are people that didn’t access the funding the first time round because they thought, “Actually, I’ll be all right but now I need it.” And now there’s a backlog. I appreciate that it’s the banks that are releasing that funding, but can the Government do anything to push that through to make sure that actual funding gets through to the businesses that really need it?

PS MP:  We tried to make it as easy as possible with the bounce back loans. So if you are going to your existing bank it’s obviously easier because they already know you. If you go into another bank, which you’re able to do, there’s still the basic know your client checks and those kinds of things that need to be done. But we work through the British Business Bank to make sure that the funding is there for the banks and that we can cut through the administration. After all that’s why the bounce back loans were created in the first place, because the original CIBLS loans, we’re finding a lot of lack of take-up either because either the banks didn’t want to lend or the there was no appetite because of the checks that had been done and the personal guarantees for businesses. So we we’ve always shown that flex and we’ll continue to work if there is a problem about waiting lists to make sure that people would get the cash in their hands when they need it. It’s no point in doing it when it’s too late. Any SME will tell you that cash is king.

The Business Herald YBKBS Small Busines News for Smart Business Owners
Listen to the Podcast Here

SM: And therefore it was a surprise to see that there’s still 300,000 people in a backlog, in the waiting list across the board. It’s clear that those funds need to be accessed bearing in mind how, as you say, easy it is to apply for a bounce back loan. There shouldn’t be any hurdles there, but there is and I don’t know whether or not it’s a question of the banks administration, or the banks just dithering, in that they’ve got other, more profitable things to do.

PS MP: We can certainly look to see if there are any hurdles that we can help We should be minimising the waiting lists and working with the banks to do so, but I’ll continue to look into that.

SM: So in the past there was EU funding that was made available to help SMEs grow, like the growth accelerator, the ESF, and the ERDF fund. Obviously now that we can’t ask Europe for funding on stuff like that, do you think that it would be appropriate to have equivalent funding so that there’s, training and growth and improvement in SME’s still available?

PS MP: Very much so. We want to be able to support funding. We want to make sure that we have the opportunity now to make sure that the funding reflects UK’s priorities. That we can direct it and time to reflect our economy and our local economies. We’ll make sure that the domestic UK wide funding will at least match the currently EU receipts. That’s around on average about a billion and a half a year, we’ve got the shared prosperity fund to make sure that we can help level up and create opportunities right away across the UK for people in places as well. There’s certain priorities and it’s going to be investing in people. It’s going to be making sure that we can have those skills that are tailored to that to local needs, like work based training. Supplementing and tailoring national programs like the adult education budget.

It’s going to be investing in communities in place, clearly cultural and sporting facilities, the civic and green and rural infrastructure, community owned assets, but also investment for local businesses that you talk about as well, to make sure that we can support innovation and green tech adoption. And again, tailor that to local needs. When we come and talk about our recovery, we want to make sure you’ve heard the well-trodden phase now about “building back better”. But that means something, it just allows us to recalibrate and meet our net zero target that we’ve set for 2050, which in itself will create some really good job opportunities. So there are 250,000 job opportunities with £12billion that we’re bringing forward, which in itself will hopefully leverage three times that amount in private infrastructure and private funding. And in terms of innovation, to make sure that we can become the real science superpower, which we’ve proved what we can (already) do with the vaccination project. And when we’re all working together and we’ve got the government actually helping to invest, you’ve got the UK scientists doing their thing, and you’ve got UK institutions like the NHS that are rolling it out. That just goes to show how you can triangulate a situation like that and with UK businesses and innovators, right at the heart of it.

SM:  The vaccination program is amazing. (It shows) how when government reduces or removes hurdles (going) to market effectively, and there’s massive funding behind it and there’s real drive from all parties involved it shows you what can happen.

PS MP: Absolutely. I was talking about agility before and if we can have something as a system now, like that shared prosperity fund that matches our own ambitious UK missions, and we can get to the point where government is setting an ethos and an atmosphere and investing, but not micro-managing everything, then we can do amazing things in partnership.

SM: So the question is, how does that flow down to small businesses? At the moment we’ve seen NHS contracts for instance go to massive organisations and small businesses are a second thought. How do we ensure that small businesses get some benefit from that? Part two of the question is how in your role do you ensure that the voices of small business people are heard and actually prioritised, or put amongst the ones with bigger voices, louder voices, the lobby, the people that can have lobbyists on board?

The Under 25's have been hit hardest through the Pandemic and Apprenticeships SHOULD be there to help - YBKBS Small Business for Smart Business Owners
What will 'filter down' to SME's in the UK?

PS MP: So you can see in terms in supply chains the vaccination was a very specific thing that you can really only put on scale with those bigger companies. But if you look at something like aerospace, for example, which I also work on, you’ve got Airbus and Boeing, these big companies, but you also involve a huge number of SMEs in the supply of some really exciting technological advances for the future. 

There’s this phenomenal innovation that’s happening here in the UK, but SMEs are very much at the heart of the supply within that. But in Government terms, we are working on and continue to work on our procurement strategy to make sure that what we’re doing directly, we can get to SMEs. Making it easier for SMEs to be able to bid into that, to hang off some of these big and bigger companies. 

SM: And how do you ensure that you’re hearing the voice of small business?

PS MP: I speak to small businesses every day, frankly. So I do a number of different things in base, with hospitality and retail. So yes, I deal with all the big pubs and restaurants, but yesterday I had a call with small restaurants and pub owners in Bolton. I do SME round tables working with the Federation of Small Businesses, with QuickBooks, Intuit and Sage, who obviously have lots of SMEs as their customers. I’ve spoken to the chief executive at Etsy. And he introduced me to a number of very small businesses working for the kitchen table. 

A lot of women in particular, some 80% of Etsy’s users are women that are really connecting them up with their customer bases. So there’s lots of work done to make sure that every SME…actually their definition of SME if there is one, involves some pretty hefty businesses; 250 employees. But the kind of business I ran, the small businesses were around my kitchen table, or my study, or with maybe a couple of other people at most. So when I talk about small businesses, I talk about really small business often. That’s what I need to adjust in this job.

Steven Mather was Talking to Paul Scully My, Minister with Responsibility for Small Business for The Business Herald Podcast

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Business Lawyer and Author.

One of the countries leading litigation lawyers in the UK with 13 years experience and counting.