The Business and Trade Committee has urged the government to rethink what it described as an "inadequate" response to its recommendations on supporting Britain's small businesses, warning that mounting cost pressures are forcing firms to close and threatening high streets and economic growth.
Ahead of the appearance of Secretary of State Peter Kyle before the Committee today (July 7), MPs called on the Department to submit a fresh response within two months, arguing that ministers have failed to address many of the most pressing issues facing small businesses.
The Committee said the government's reply to its February report largely repeated existing policies and commitments, fully accepting only six of the 36 recommendations put forward following an inquiry into the challenges facing SMEs.
The original report concluded that many small businesses are experiencing cost pressures comparable to those seen during the pandemic, but without the benefit of similar financial support. MPs warned that the resulting business closures are posing a growing threat to high streets and the wider economy.
The Committee criticised the government's approach to tax policy, saying ministers had failed to meaningfully engage with recommendations on business rates, VAT and tax administration, leaving key concerns unresolved.
It also cited research by Professor Ben Lockwood, which found that a one percentage point reduction in business tax rates could reduce vacancy rates on eligible high streets by around five per cent.
Rt Hon Liam Byrne MP, Chair of the Committee, said: Rt Hon Liam Byrne MP, Chair of the Business and Trade Committee, said: "Small business is the backbone of Britain's economy, but too many now feel they are carrying a burden that is becoming impossible to bear.
“When we published our report in February, we warned that many firms were facing cost pressures comparable to the pandemic. Since then, those pressures have only intensified.
"We welcome the Government's willingness to listen in some areas but too often it is repeating existing announcements, not confronting the problems businesses told us about first hand.
"Growth begins with small business. If Britain is serious about growing the economy, reviving our high streets and creating good jobs, we need a bolder, more ambitious plan to help small firms invest, hire and thrive. That is why we are asking ministers to think again and come back with a response that rises to the challenge."