Small businesses fear the future ahead of the Chancellor’s Autumn Budget in November as tax rises loom.

Ricky King, 35, a sales manager at Goats of the Gorge, a Bristol-based handmade skincare company, said small businesses have been hit hard by the cost-of-living crisis and economic uncertainty.

He said: ‘Our product is skincare – an optional, not a necessary product. We are lucky to maintain customer relations, but we have seen a drop in sales.

‘B2B [business-to-business] sales have dropped, but we are maintaining our efforts. Times are hard, we’ve had shops not able to continue selling our product [and some are] going under.’

Ricky said some shops that previously sold Goats of the Gorge’s products have gone bust – despite owing the company money.

Ahead of next month’s Budget, he urged Chancellor Rachel Reeves to make cuts to corporation tax to ‘help offset the economic impact’ on businesses.

He also said that cutting VAT to around 16-17% would make a ‘massive difference to us’ because the money would instead be reinvested in the business every quarter.

New research by Bibby Financial Services (BFS), a company which supports small businesses, has found that over half (52%) of SMEs believe Government initiatives are failing to protect them.

And more than six in ten (62%) said inflation and high costs are reducing their ability to invest in jobs and growth.

Now, SMEs are demanding low-interest loans, reduced business rates and a reversal of the increase in National Insurance Contributions (NICs) ahead of the Budget.

US tariffs are also cited as impacting profit margins for many small businesses.

To help them reach customers in new markets overseas, nearly a quarter (23%) of survey respondents want the Government to establish new trade agreements, and 19% would like designated support to alleviate the impact of international tariffs.

Jonathan Andrew, chief executive of BFS, said: ‘The current economic climate is hugely challenging for SMEs that are seeing profit margins and spending power eroded, and overheads increasing.

‘On top of continued supply chain pressures both domestically and internationally, these issues pose a significant risk to economic growth, but more importantly, they threaten the survival of thousands of small businesses across the country.’

He added: ‘Businesses are crying out for support and are sending a clear message that the high cost of business experienced in recent years is reaching the boiling point.

‘What they need are practical measures that protect them against mounting cost pressures and volatile international trading policies. This support must be forthcoming if the UK economy is to prosper any time soon.

‘There’s a real opportunity in November for the Chancellor to back Britain’s small businesses with bold measures that cut red tape, roll back the burden of increasing costs and improve the environment for international trade.

‘SMEs need to see these promises turned into concrete actions that restore their confidence to invest, hire and expand rather than just survive.’

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On May 22 2024, Rishi Sunak stood outside of Downing Street in the pouring rain and announced he was calling a General Election.

Six weeks later, Sir Keir Starmer pulled up in his car to No 10 on July 5. As he stepped out, the sun came out.

The metaphor was clear. In contrast to the bleak, miserable end to the Tories’ time in charge, here was a new leader promising brighter days ahead.

During his first speech, he told the nation: ‘If you voted for Labour yesterday, we will carry the responsibility of your trust, as we rebuild our country. 

‘But whether you voted Labour or not, in fact – especially if you did not, I say to you, directly, my government will serve you.’ 

Looking back at that day a year on, it might not be too hard to argue that optimistic idea about Starmer bringing a warm glow to the country was quite a pathetic fallacy.

Labour’s polling numbers have collapsed since that day, and the party is now consistently stuck several points behind Reform. The PM himself is doing only marginally better, with a net favourability rating of -34 according to YouGov.

On Tuesday, the government suffered its biggest ever rebellion despite gutting its flagship welfare bill. The following day, the Chancellor wept openly during PMQs.

By Thursday evening, one of Starmer’s MPs, Zarah Sultana, announced she was leaving the Labour party and would ‘co-lead the founding of a new party’ with the ex-Labour leader, Jeremy Corbyn. He said discussions were ‘ongoing’ after the announcement.

Outlining her reasons for leaving the party, Sultana accused the Labour Government of failing to improve people’s lives, and claimed it ‘wants to make disabled people suffer’ in reference to ministers’ proposals to reform welfare – a claim that was rejected by Home Secretary Yvette Cooper.

So where did it all go so wrong?

A fateful speech

It’s impossible to pick a particular moment where the trouble started. But if we were going to have a shot regardless, polls wouldn’t be a bad place to start looking.

They seem to suggest Starmer’s approval rating falls off a bit of a cliff around the end of July 2024 – barely three weeks after he started his new job.

What was happening politically around the end of July? Well, one big thing happened on July 29: that was the day Rachel Reeves stood up in Parliament and declared a massive cut to the winter fuel payment.

In hindsight, it’s a little baffling. Starmer’s government was still defining itself to voters, trying to project an image about who they were and what they represented.

There’s an argument that the Chancellor was aiming to get the tough but necessary decisions out of the way as early as possible, so they would have faded to the back of voters’ minds by the next general election.

But clearly, first impressions matter. Despite the recent backtrack, in which the payment was returned to everyone receiving a pension who has an income below a £35,000 threshold, this might have been the moment many voters made up their mind about the PM and his ministers.

All-consuming black hole

And of course, the Winter Fuel Payment was not the only announcement in this vein. There was inheritance tax on farms, and the retention of the two-child benefit cap.

All these ‘tough decisions’ circled around something else mentioned for the first time in that July 29 speech: the ‘£22 billion black hole’ in the public finances that Reeves said she had found left over by the Conservatives.

Many of Labour’s woes in government can be traced back to this figure. According to the Parliamentary transcript Hansard, the phrase ‘£22 billion black hole’ has been used in the House of Commons no fewer than 287 times since last July, largely in the context of justifying unpopular choices.

Plenty of political goodwill has been spent on filling it but, as might be expected from a black hole, everything else has been sucked into it too.

Several of the government’s policies enjoy broad public support – charging VAT on private school fees to fund state education; closer alignment with the European Union; and expanding free school meals, for example.

But it’s the tricky decisions that the government says it must make to get the country on a firmer fiscal footing that really stick with people.

As a result, a year after the party’s landslide victory, the Labour government has found itself defined more by the things it didn’t want to have to do, than the things it did want to do.

This week, the sun was blazing again ahead of the first Starmiversary. But the Prime Minister may well have spent those days wondering how much longer it’ll be until the clouds clear for him.

Get in touch with our news team by emailing us at webnews@metro.co.uk.

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