Spring Statement Must Deliver Practical Support for Small Firms Facing ‘Real, Severe’ Pressures – Plaid Cymru Urge Chancellor to Back Small Welsh Businesses

Ahead of the Chancellor’s Spring Statement on Tuesday 3 March, Plaid Cymru Treasury spokesperson Ben Lake has called on the UK Government to deliver targeted support for small businesses facing mounting financial pressures.

Although Chancellor Rachel Reeves has described her Spring forecast as a “low-key” update, Mr Lake has warned that many small firms – particularly in rural Wales – are facing “real, severe” pressures.

Research suggests that a typical high street business could face an additional £25,000 in employment costs this year, alongside significant increases in energy standing charges. According to business surveys, as many as 35% of small firms are considering closure or contraction in the coming year if conditions do not improve.

In advance of the Spring Statement, Mr Lake urged the Chancellor to consider the following measures:

- Energy bill support for businesses: Extend to non-domestic users the 75% reduction in Renewable Obligation costs currently applied to household bills, providing relief to small firms facing steep increases in electricity standing charges.

- Employment cost relief: Increase the Employment Allowance so it continues to fully cover the employer National Insurance contributions of at least four employees on the National Living Wage, helping small employers manage rising payroll costs.

- VAT reduction for hospitality and tourism: Reduce VAT for the hospitality and tourism sector to provide much-needed breathing space, encourage reinvestment, and support economic growth – following the example of other European countries that have benefited from reduced rates.

Speaking during a debate to note St David’s Day in the House of Commons, Mr Lake said: “On St David’s Day we are reminded of our patron saint’s words to ‘do the little things’. In that spirit, the UK Government must take practical, immediate steps to support the small businesses that form the backbone of our economy.

“In Ceredigion Preseli, around 81% of businesses are classified as small businesses, making it the small capital of Wales, an accolade we are very proud to hold. 35% of those businesses are in the agriculture, fisheries and forestry sectors, and some 15% in hospitality and tourism. In recent weeks, I have met with a number of small business groups from Aberystwyth in the north, to Fishguard and Goodwick in the south. They’ve all told a tale of difficulties and challenges that they face as small employers. There are cumulative pressures that are having a real, severe impact on their ability to trade.

Mr Lake continued:“In the spirit of doing the small things, and in advance of the Spring Statement next week, I thought I would draw the attention of the House to some measures these businesses have suggested the Government could take to help them build a firmer and more prosperous future.

“On energy costs, businesses with an annual electricity consumption of around 40,000 kWh, which is a typical small restaurant, gym, café, are currently looking at a potential rise in the standing charge of 40%. One proposal potentially is to mirror the support that it is offering for household bills to non-domestic bills and that is the 75% reduction in renewable obligation costs from energy bills for businesses. That would offer much needed support to many businesses.”

He also highlighted the impact of rising employment costs:“Between January of last year and this year an employer of nine people on the National Living Wage employment cost increased by the equivalent of 12.9% and the employer National Insurance bill by 46%. One proposal that they suggested the government could entertain next week is to upgrade the Employment Allowance so that it continues to cover the employers’ National Insurance contributions of four employees on the National Living Wage. That again would offer such great support to the businesses that I’ve spoken to.”

He reiterated his party’s call on the Treasury to review VAT for hospitality and tourism: “If the Government could look again at the rate of VAT to decrease it to 15% would offer much needed breathing space with some of these increased pressures and costs but also the opportunity to invest in their businesses and their staff, something that we all know we want to see if we are to have economic growth across the land. Other countries have shown that when you reduce the rates of VAT for tourism and hospitality, it can bring about significant benefits.”