SMALL BUSINESSES are being doubly damaged by restrictions across the UK. While large corporates are able to trade as general stores – food and ‘dry’ goods – small independent or specialist store-front businesses are struggling to keep solvent long enough to hopefully see doors opening again sometime before the summer.
Much of the pain has been suppressed by furlough and schemes that have left small businesses on life support. The big question is whether many will survive when the Treasury lifelines are withdrawn.
In Northern Ireland financial concerns are compounded by the imposition of the NI Protocol and attendant regulations, checks and mountain of paperwork for traders of all sizes.
Much of attention on the Protocol has been on ‘grace periods’ to allow supermarkets to keep shelves full. Peter Sommerton, Managing Director of McCulla Refrigerated Transport outlined difficulties in late January – “Eight days for carrots to get to Belfast with complex Brexit Checks”. This week in the Belfast News Letter he continues to point out the absurdity of what is happening, but points to the real harm small businesses are suffering at this time.
Pointing out that the grace periods are “only influencing a small narrowing band of product” he further states: “my central concern is that underlying deep problems haven’t actually been addressed.” While everyone looks to supermarket shelves as some kind of yardstick, his point that the impact on much of the rest of the economy was still not appreciated, and this would become increasingly clear as economic activity recovers once lockdown eases, is well made.
At the end of February, iakoe, an e-commerce marketing firm with offices in Edinburgh and Belfast suggested that up to two thirds of retailers in GB were planning to stop selling to Northern Ireland. While the company accepted that many expressed optimism things would change, others reported lost orders as the cost of fulfilling orders became clear. A muddled picture for sure, lending to uncertainty and pointing to serious supply and underlying market issues going forward. The three examples following show the range of challenges for small businesses in Northern Ireland and Great Britain.
• A small haulier, employing just 15 people in the Belfast docks area is concerned that it lacks the resources to support customers, with large hauliers employing teams of people to do nothing other than input data into the systems.
• A General Store in a small market town sources many items from GB. The store has successfully moved online. The business has two major challenges. Many of the sources of GB product have decided that the hassle of wading through the new rules is not worth the effort and have declined to provide goods to Northern Ireland. Those that have persisted with sending goods to Northern Ireland have increased cost to cover both time and effort spent in facilitating sales and delivery. For the store, there has been greater time spent trying to find alternative sources of goods – often at greater cost – but the range available to customers has declined and the cost increased. That is probably true of any local competitor to the store owner. The greatest impact, however, has been online, where reduced range and greater costs means the NI store has found itself to be uncompetitive with GB retailers online who do not have to bear the same challenges.
• A local distributor for a sports goods business based on the South coast of England notes that his business is seasonal, low volume, though high value. After two months wading through the process to try to register as ‘goods not at risk’ (of entering the EU Single Market) he has discovered the requirement, monthly for ‘Supplementary Declarations’. These seem incredibly complex for such a small and discrete business.
None of the three examples provide a common factor. The NI Protocol is all embracing and so far away from what Jacob Rees Mogg described on a podcast as an anticipated ‘light touch’ process that it seems incredible that the British Government seems to still insist that somehow this will all eventually be resolved. Hard to imagine any resolution when the absolutist EU approach meets the ‘it will be alright on the night’ UK approach which seems to have been based on a misjudged view that the EU would bring goodwill and good faith to the table.
High politics doesn’t even begin to address the very real challenges of small businesses in Northern Ireland. A common refrain when speaking to the principals is that no-one is listening to their real and daily challenges. Who speaks for them?
There is no shortage of trade bodies to represent businesses. The Road Hauliers Association, the Retail Consortium, the Federation of Small Businesses are just a few. The Belfast Chamber of Commerce has also been a vocal in respect of the retail and businesses in the capital city. Mostly the trade association voices have been seeking to twiddle with the process rather than imagine a rethink – on any topic. Many had lobbied against ‘no deal’ and were all too keen to engage with Irish and EU representatives in considering ‘special arrangements’ for Northern Ireland. Perhaps hoping for ‘best of both worlds’ the outcome is that Northern Ireland sits uncomfortably between two stools.
It is a feature of Government that rather than having a raft of people knocking on the door a single voice is preferred. ‘Partnership’ is how this is described. Inevitably the strongest cut through and in such partnerships the quid pro quofavours those with greatest resource to dedicate to making their case. Government plays the game by giving sweeties every now and then: ManufacturingNI (representing £20 billion of annual sales) boasts of “protecting the £58m per year Rates benefit, we have taken tens of millions of pounds off energy bills, secured finances for skills investment and much more.”
In times such as Covid and Protocol, however, the very real impact is on small businesses that are not part of organisations and simply get on with service in the community. That voice of smaller businesses gets lost, and that too often obscures the real harm while larger organisations (eg supermarkets) find what works for them – great for corporates, less good for the small business in a local town.
That matters a lot in Northern Ireland; an SME dominated economy with 80 per cent of NI private sector employment in SMEs (compared with under 60 per cent for the UK). Something the EU might have thought about more, given its awareness of the nature of the NI economy: ESIC summary assessment report for Northern Ireland.
If Scotland thinks the EU cares about the economy or anything other than its own aggrandisement the Northern Ireland Protocol should disabuse it of that view.
The EU cares no more for Scotland than it does for Northern Ireland. This is about its power to control a legal line, and nothing else matters; certainly not the interests of consumers or small businesses.
That is without the impact of Covid on small business prospects as we emerge from lockdowns, with little by way of timetable, and despite a hugely successful vaccination programme a high level of continued uncertainty being communicated by the political classes.
Small business matters. It doesn’t always have a voice, but the close connection to the community and by extension the consumer (and voter) means any government (no matter how big) may regret presuming its silence means it lacks an opinion that has absence of bite.
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@thedissenter blogs regularly at www.thedissenter.co.uk and produces the PoliticalOD podcast along with @3000Versts.
