Businesses across the UK are facing unprecedented challenges reminiscent of the pressures felt during the Covid-19 pandemic, according to a stark new report from Parliament’s Business and Trade Committee. The committee’s chair, Liam Byrne, has called for a comprehensive and ambitious reform plan to combat rising business closures and declining high street vitality.
A Call for Action
The committee’s findings highlight that small enterprises are grappling with a multitude of issues that threaten their survival. Byrne emphasised the need for immediate government intervention to safeguard the future of these businesses, stating that the current pressures are “cumulative, structural and self-reinforcing.” Without decisive action, the risk of accelerated closures looms large, jeopardising the government’s growth agenda.
The report specifically identified late payments as a critical concern, citing data from Sage that revealed UK small businesses were owed a staggering £112 billion in unpaid invoices by the end of 2024. Alarmingly, nearly half of all invoices are settled late, with standard payment terms of 60 to 90 days commonplace, particularly in sectors like construction.
High Street Decline
The committee also addressed the concerning trend of high street closures, attributing the downturn to a combination of factors including exorbitant business rates, rising retail crime, and surging energy costs. These issues disproportionately impact physical retailers, making it increasingly difficult for them to compete.
Byrne pointed out, “SMEs are facing late payments, rising energy costs, increasing crime, a complex tax system, and barriers to growth that are compounding rather than easing. These pressures are not isolated; together they pose a real risk to business viability, high streets, and economic growth.” He further warned that the decline of high streets is not incidental but rather a consequence of neglectful policies.
Government Response
In response to the committee’s findings, a government spokesperson acknowledged the challenges faced by small businesses, declaring them the “lifeblood of our communities.” The spokesperson reiterated the government’s commitment to fostering a conducive environment for these enterprises, citing a £4.3 billion support package designed to mitigate business rate increases. Additionally, they mentioned upcoming initiatives, including a new High Streets Strategy aimed at revitalising local communities.
However, critics remain sceptical. Shadow Business Secretary Andrew Griffith condemned the existing business rates and outlined the detrimental impact of retail crime and energy costs on brick-and-mortar stores. He asserted, “Today’s report confirms what high street businesses already know: these issues are pushing shops to the brink.”
Why it Matters
The survival of small businesses is crucial not just for local economies but for the overall health of the UK economy. As high streets continue to struggle, the potential for job losses and diminished community engagement grows. Without urgent reforms to tackle late payments, re-evaluate business rates, and address crime, the UK risks losing a vital part of its economic and social fabric. The call for action is clear: the government must act decisively to ensure that high streets can thrive once again.
