Looking beyond the current issues around the ‘pingdemic’, the UK Government must develop a plan to help British enterprise switch gears from survival to growth in the post-pandemic economy, the IoD has argued, as it released new survey data.
In a survey of close to 600 SME business leaders, 40% said difficulties finding the right talent was the biggest challenge their organisation faced in scaling-up. The regulatory burden (36%), employment costs and taxes (25%), and access to finance (19%) were also considered among the top barriers to growth.
When asked what immediate measures the Government could put in place to support their growth, almost 1 in 2 directors cited support for employment costs, such as NICs relief. Just over one-third said improved incentives for R&D and digital investments would be most useful for their scaling ambitions. 31% supported more low-cost loans, while 1 in 4 felt more generous investor incentive schemes would be beneficial.
As many existing and new business leaders will face challenges in growing and adjusting their organisations to the post-pandemic environment, the IoD recommended the Government explore a suite of options to stimulate enterprise once the economy reopens:
- Extend the Kickstart Scheme beyond 2021, invest in the Knowledge Transfer Partnership scheme to allow SMEs to access university talent, and suspend the Immigration Skills Charge for small businesses.
- Temporarily slash non-wage costs like employers’ NICs, for example by raising the employment allowance, for start-ups and the hospitality sector in particular.
- Encourage investment by creating a new temporary tax incentive, to support spending on retraining, technology, and green growth, or widen R&D tax reliefs to include these.
- Boost funding for scale-ups and start-ups by easing restrictions on the Government’s Seed Enterprise Investment Scheme and Enterprise Investment Scheme, doubling the maximum company investment threshold on the former.
Dr Roger Barker, Policy Director at the Institute of Directors, said: “Businesses will face challenges switching from survival mode to growth in the year ahead.
“Whilst we have seen the removal of most restrictions this week in England, it won’t be back to business as usual for many directors. Some firms will be busy repairing balance sheets damaged by the pandemic, others will be looking to reshape their organisations. While business confidence is at an all-time high, there remains many barriers to scaling-up after the pandemic.
“Finding the workers with the right skillset is becoming a growing challenge. SMEs are struggling to recruit, and when they do hefty non-wage costs like NICs begin to add up. Firms are also keen to invest but with cashflow tight there remains some hesitation.
“While the pandemic is by no means over, its important the Government thinks ahead to provide a clear runway for businesses to take-off. Rapidly growing firms and the middle market will be the driving force for our growth, so supporting them now can drive gains to our growth and productivity in the long-run.
“SMEs access to talent can boosted by improving connections between business and university, while smaller firms should not have to pay the immigration skills charge when it is already burdensome for them to recruit from abroad. Slashing employment costs and boosting investment incentives for both firms and investors meanwhile can really help turbocharge British enterprise’s efforts to grow out of this crisis.”