A campaign group is calling for more support for small businesses in this week’s budget after figures showed Scotland lost almost 20,000 during a year of the pandemic.
The Federation of Small Businesses (FSB) has written to Finance Secretary Kate Forbes saying that the budget should be “designed specifically to help smaller businesses finally turn the corner” after suffering “significant setbacks” over the last two years.
Latest figures showed that between March 2020 and March 2021 the estimated number of businesses in Scotland fell by 19,805, a drop of 5.4% from the previous year, according to the Scottish Government Businesses in Scotland 2021 statistical release.
The FSB said unregistered Scottish businesses accounted for the bulk of the decline, implying that the crisis has been particularly difficult for the self-employed and new start businesses.
Of the businesses lost, 19,015 were unregistered (those not registered for VAT and/or PAYE) while the remaining 790 were registered businesses.
Andrew McRae, FSB’s Scotland policy chair, said: “Almost 20,000 Scottish enterprises vanished over a single year of the Covid crisis. And the statistics suggest the bulk of these businesses were the very smallest operators, like self-employed individuals and new-start businesses.
“The stories behind these figures will all be different. But they’ll include the tour guide who had to get a job as he couldn’t run the business he loved while there were no tourists.
“Or the migrant business owner who decided to return to their country of origin during the crisis and then never came back. And the person who ran the local café, but couldn’t make it turn a profit when faced with restrictions.
“While the public health measures that were taken were necessary, there’s no doubt that they took a huge toll on local firms and the self-employed. That’s why we believe that policymakers have a duty to help these operators recover from the crisis.”
The FSB is urging the Scottish Government to outline new measures to aid the recovery of local businesses in the budget on December 9.
In its letter to Ms Forbes, the FSB urges the Scottish Government to earmark funds for grants to help Scottish small businesses build their digital skills and reduce their environmental impact.
The campaign group also wants the Scottish Government to commit to another year of business rates relief for the firms hit hardest by the Covid crisis.
In addition, it has asked the Scottish Government to investigate a collective insurance scheme for the country’s self-employed, taking inspiration from similar initiatives on the continent.
Mr McRae said: “What we need to see from the Scottish Government this week are commitments to help Scotland’s small business community get back on its feet. That means help for the current crop of businesses, and efforts to encourage and support the next generation of people who want to set up on their own.”
The FSB said there are now 344,505 enterprises in Scotland, the smallest number since 2014 when there were 329,765 businesses.
Scottish Conservative economy spokeswoman Liz Smith said: “Small businesses are the backbone of a strong economy and the FSB are quite right to demand a support package for them in the Scottish budget.”
She added: “Kate Forbes must ignore the anti-growth extremists in the SNP-Green Government, and provide them with the support they desperately need.”
A Scottish Government spokesman said: “We acknowledge the tough conditions Scotland’s businesses face as a result of Covid-19, which is why the Scottish Government has provided more than £4.4 billion in support.
“The 2022-23 Scottish Budget on 9 December will underpin delivery of the Programme for Government, reflecting the challenges facing businesses, communities and households as Scotland continues to recover from the pandemic.
“This year’s budget is expected to be challenging as a result of the continued pressure facing our public services, with substantial reductions to our funding from the UK Government.
“However, Scottish Ministers will ensure all investment is focused on helping people across the country.”