Covid-19: Small Businesses in Streatham

Bell Ribeiro-Addy Excerpts

Tuesday 18th January 2022 Westminster Hall

[Bell Ribeiro-Addy (Streatham) (Lab)]

I beg to move,

That this House has considered support for small businesses in Streatham during the covid-19 outbreak.

It is a pleasure to serve under your chairpersonship, Ms McVey. I am glad to be introducing this debate on a vital issue in my constituency—an area that includes Brixton Hill, Clapham Common and Tulse Hill.

As we all know, small businesses are the backbone of our local economy, culture and community, and I recognise the enormous contribution that small and medium-sized enterprises make in Streatham and all over the UK. Whether it be corner shops and cafes that have had to work throughout the pandemic, or independent retailers and the self-employed who have been short-changed by the Government, they deserve support and recognition for the diverse range of services and support that they continue to provide to our communities. However, it is devastating that small businesses are likely to have seen their turnover plummet by more than half, and that freelance workers and the self-employed have been completely ignored by the Government and left with minimal financial support during the coronavirus pandemic. Almost 50 shops a day vanished from our UK high streets over the first six months of 2021, and Labour projections from October suggest that 263 businesses in Streatham alone are at risk of closure over the next three months. The situation is completely dire.

Members may know that Streatham was home to the UK’s first supermarket, and that Streatham High Road is the longest high street in Europe and home to a hub of creative and diverse small businesses, which is reflected through our thriving arts and culture scene. I always tell people that should an apocalypse come, my constituency is probably where they would want to be. We have the windmill at Brixton Hill, which was the last operational windmill in London; two operational beehives; and numerous community gardens, such as Railside gardens, Urban Growth and St Matthew’s gardens, which always produce the best in fruit and veg.

If vegan January has not quite hit, we also have London Smoke & Cure, which offers the very best in smoked and cured fish and meats. If the practicalities are not enough to convince people, we are also home to the Inkspot brewery, not to mention some of the finest craftspeople in the country. In Streatham, we grow, produce and sell locally. We also regularly host the Streatham Festival, the Streatham Food Festival and the Streatham Literature Festival, run by Jane Wroe-Wright and her tenacious team, and there has been an enthusiastic local campaign to reopen the historically listed Streatham Hill Theatre as a community arts hub.

Over the past two years, I have visited dozens of small businesses in Streatham to talk to owners and staff about the impact of the pandemic. Since the earliest phases of the pandemic, they have thrown themselves into the coronavirus response, fighting to keep their businesses open while demonstrating their sense of duty to the wider community. In Streatham, we saw independent coffee shops giving away free coffee to NHS workers, computer repair specialists offering to repair laptops at no cost, and local firms stepping up to laser-cut personal protective equipment to meet shortages in our care homes.

We have also seen some amazing and original initiatives get off the ground. Whether it is local people donating their used devices to disadvantaged school pupils, food banks managing to meet a 134% increase in demand or mutual aid groups springing up to help the community, we have seen people pull together and innovate. Time after time during this acute period of hardship, our small businesses have stepped up. However, the pandemic has meant that SMEs in my constituency and across the country have had to close their premises permanently due to the impact of declining footfall.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for securing the debate. I asked a question on this issue in the Chamber some time ago. All too often, we have heard of businesses across the United Kingdom having to close for isolation periods as there are not enough staff to keep them open, as she said. Does she agree that consideration should be given to a scheme whereby businesses with fewer than five members of staff, which we are referring to, are eligible for some sort of financial assistance should they have to close due to staff isolation, such as if staff have been a close contact of a covid case?

[Bell Ribeiro-Addy]

The hon. Member is absolutely right. I will make that point later. We have to do everything we can to support our small businesses.

Examples of business closures in Streatham include acclaimed live music and hospitality venue the Hideaway, where I and others across the city have spent many a good night out. This has been a major loss for the area—an independent venue at the heart of the community that for many years has been growing local and international music and comedy. Due to the number of lockdowns, the slow response for those in the night-time economy, and social distancing requirements, its business model was untenable. We also saw the closure of Fal Patel’s local convenience shop in Clapham Park and E & A Wates furniture shop on Mitcham Lane, which once undertook restoration work for the parliamentary estate during its 120-year history.

Many start-ups that would have grown to become high street businesses were unable to access any grants due to not having a high street premises, which has impacted the long-term economic growth of the area as our cafés, co-working spaces and performance spaces, and the buoyancy of our local business hubs, rely on the small enterprises of the daytime economy.

These are only some of the publicised closures within the constituency. It is fair to say that the demise of small businesses is so vast that we all personally know of someone in our local community who has lost out on their business during the pandemic; maybe it was a local restaurant, an appliance shop, a corner shop, a pub, a bar, a butcher, a baker, a greengrocer, a hairdresser—the list goes on.

[Florence Eshalomi (Vauxhall) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Ms McVey. My hon. Friend is making a really good speech, outlining the many issues faced by businesses in Streatham. In my neighbouring constituency in Lambeth, we face a number of similar issues. She outlined that many businesses missed out. A number of those businesses also missed out on loans offered by the Government. To see the Government want to wipe away £4.3 billion of loans given to fraudsters is another kick in the teeth to those businesses that folded because they were not eligible for any support. Does my hon. Friend think that the Government should rethink that proposal?

[Bell Ribeiro-Addy]

I thank my hon. Friend for her intervention. She is absolutely right. The Government need to rethink that proposal because it is leading to the closure of high street businesses and small businesses. Let us not forget that, when these 50 businesses a day shut up shop across the country, that is 50 people a day, along with their families, who depend on their business as a primary source of income, now out of work. It is not only the economic value that is disappearing from our high streets; the wider cultural contributions that these businesses make to the community disappear too, all because Government support was inadequate.

Supporting business in my constituency and my hon. Friend’s constituency are Brixton business improvement district, This is Clapham BID and the mighty InStreatham BID headed by Louise Abbotts. Our BIDs have worked tirelessly over the past few years against a tide of transport issues and the growth of online sales to keep people going out and shopping locally. We cannot forget the impact this has had on their budgets and capability to continue sustaining our local businesses in the long term. Even before the pandemic began, small businesses found themselves on an uneven playing field, and the original form of Government relief saddled small businesses with further debt, offering them loans at high interest rates through commercial and retail lenders or effectively deferring their rent payments. At the start of the pandemic, these no-strings-attached loans were offered to companies registered in tax havens, yet uptake on small business loans remained low. The 2017 business rates revaluation meant that the average small shop would see a £3,663 hike over the next five years while supermarket chains would see 6% reductions. It cannot be fair that some independent businesses, such as small cafés, contribute to the taxman at a higher effective rate than big corporations and high street names. Business rates are a 20th-century system of taxation, yet we are already over a fifth of the way into this century. Four out of five retailers say they may have to close some locations without an urgent easing of the burden of business rates. Retail pays over the odds at the moment; it accounts for a quarter of the business rates bill while representing a mere 10% of economic output. The current system does not work for our local public services, as the funding of local councils is linked to rates revenue in an area, rather than local needs. We need a system that is fit for the 21st century.

There is an emerging economic consensus that the state has a role to play in helping the economy to function properly, although it is a role that the party of government seem reluctant to accept. In the early days of the pandemic I called on the Treasury to impose financial conditions on loans for big companies asking for state support. It is galling that it ignored this call, and instead gave no-strings support to companies that were registered in tax havens, paid out huge dividends to shareholders and paid CEOs and senior executives ridiculous compensation packages, in some cases while laying off their rank and file workforce—all while small businesses have languished.

While businesses were grateful for the little support they received during the covid-19 pandemic, it simply was not enough. More substantial support is desperately needed to fight the onslaught of rising costs in food, inflation, energy and the major recruitment crisis that Brexit and covid have created for business communities. The Government’s own figures suggest that we will see our household economy shrink by £1,250 per year because of their trade deal with the EU. It will not be the Amazons of the world or big Government contractors that feel this loss—it will be ordinary people and small independent businesses.

Figures that we have seen show that smaller businesses lack the infrastructure to respond to the challenges that Brexit has presented compared with larger companies. A recent survey by the British Chambers of Commerce found that half of small businesses are finding it harder to export to the EU. Due to the new complexities of the trading relationship, the Government set up a small and medium-enterprise fund offering grants to help our businesses overcome those challenges. However, this fund has rightfully been criticised for being too complex. At the end of last year, we saw a report from City A.M. on information from the cloud accounting provider FreeAgent that found over half of businesses experienced shrinking customer bases, while 43% were impacted by supply chain issues. Meanwhile, two in five SMEs said that their costs had increased since Brexit, particularly to import goods, while 16% suffered a shortage of talent as they are finding it harder to recruit staff. Nearly one in five SMEs have considered closing their business during Brexit and one in five did not think their business would survive Brexit.

The Government have been found wanting yet again; instead of looking forward and trying to alleviate these situations we are instead told to keep calm and carry on, as if Brexit has not impacted us. We can clearly see that it has. The Chancellor’s £1-billion hospitality support package has come too late. It is woefully short of what is needed to ensure the survival of our small businesses and was woefully slow to start, coming in on 22 December when plan B restrictions had already been in place for 19 days. It is estimated that during this period of no support, £4 billion in revenue was lost from the hospitality and leisure sector. When cases rose and the demand on our high streets slumped, small businesses were not getting the support they needed, and workers were being sent home without pay and their shifts cancelled.

During the festive period, local authorities stated that the detailed guidance for the grants was only issued on 30 December and updated on 12 January, when businesses were desperate for support to meet various costs at the end of last year. Both the Federation of Small Businesses and UK Hospitality criticised the Chancellor’s support package for being far too slow to help the most vulnerable hospitality businesses during the omicron surge. It is ridiculous for the Government to put March as the timeframe for the grants to be paid when businesses needed this support months ago.

My local business non-profit organisation, InStreatham BID, has stated:

“The grants are valued but won’t cover the cost of wage bills and food waste for that period of November and December which is usually what covers the costs for hospitality in the new year when things are naturally quieter.”

We should not have to drag the Government into supporting workers and businesses because Ministers are too preoccupied with who gets the top job to focus on the crisis at hand. Proper support packages should be announced alongside public health measures as and when they are needed. Streatham BID said:

“A £6,000 grant in no way compensates for the dramatic loss in trading hospitality businesses in particular are facing, and more important they can’t wait weeks for financial aid.”

This incoherence is exactly why small businesses are increasingly frustrated and want clearer and quicker decision making from this Government. Because the new omicron variant has hindered growth in retail, hospitality and leisure, a reduction in VAT or retaining the 5% VAT rate for hospitality is seriously needed. A business rates holiday applied until December 2022 and a reform of business taxation to level the playing field would be most helpful to businesses over the next 12 months.

We could also put in place flexible and targeted furlough throughout the ongoing pandemic—not just until the end of September—to help businesses to retain their staff. It would also be incredibly helpful during this period when many businesses have just recruited full staffing levels to sustain a busy Christmas period, only to be hit with cancellations in the region of 40% to 50% because restrictions were reintroduced. The TUC has stated that furlough needs to cover at least 80% of workers’ wages and that the Government must guarantee that no one who is furloughed is paid less than the minimum wage. That is exactly the type of furlough we need.

We also need decent sick pay that is paid at the real living wage and is available to everyone so that workers can afford to self-isolate when they need to. It has been insisted on by many hon. Members across the House over the past couple of years, but it is still being played around with by the Government as a short-term concession during a crisis, not a long-term employment right available in law.

The Government need to do more to step up and deliver the necessary support measures to the businesses of Streatham and those across the country and ensure the democratic, cultural and economic benefits of our small businesses. If the Government claim to be the party of business, why they are presiding over the decimation of our small businesses, which make up 99% of the total UK business population? It seems the unfortunate truth about coronavirus business measures is that the smaller the business, the smaller the Government’s concern for its survival.

The economic case for stronger Government intervention could not be clearer and the stakes could not be higher. The cost of bankrupt businesses, unemployed workers and lost tax revenue far outweighs the cost of acting now. Allowing small businesses to go bust is not only bad policy—risking a deeper recession and job losses—but deeply damaging to our local communities, which makes it all the more important for the Government to learn from mistakes so far and prioritise the survival of our small businesses.

--- Later in debate ---

[Lee Rowley]

I am grateful to the hon. Lady for her intervention. I completely appreciate that there are businesses and individuals who, over the past 18 months, have not been able to secure the support that they wanted and felt they needed. In an ideal world, when making public policy we would perhaps spend literally years trying to design policies to ensure that the right level of rules were around them, but we simply did not have that time in the period in which we had to move. We had to move quickly and ensure that we got as much out there to as many people as possible. The Chancellor and others have explained the reasons why the rules were drawn in that way, and I think that most people accept that, although there were difficulties, a huge amount of work was done, notwithstanding some of the challenges that have been outlined.

The second area that I will touch on is a disagreement on the situation that faces us. I accept that there are challenges, but some of the surveys and economic data coming out of London demonstrate the resilience of London businesses, and the ability of small businesses and others, not just in Streatham but across the Greater London area as a whole, to move forward, build, achieve what they can, and look to the future with confidence. Although the situation is difficult, and we have been through extraordinarily difficult times, I gently take issue with the suggestion that it is dire. Ultimately, businesses are helping us to get through it. They are doing the work that they need to do to build the economy that we need in order to pay for the extraordinary amounts of spending that have happened, and the even larger amounts of spending that the hon. Member for Streatham wants, given some of her statements.

[Bell Ribeiro-Addy]

Will the Minister give way?

[Lee Rowley]

I will speak for two more minutes, and then leave time for the hon. Lady to sum up. I hope that she can come to the point that she wishes to make.

[Lee Rowley]

As there is no summing up, I happily give way.

[Bell Ribeiro-Addy]

I hope that the Minister agrees that unprecedented times call for unprecedented measures. Although I appreciate what he says, and all the grants that he outlined, businesses in my community simply cannot access them for a variety of reasons. Will he commit to coming down to Streatham, talking to those businesses, seeing what the problem is and perhaps designing a solution that is better for all? We may even treat him to a complimentary beer if he is willing to come down.

[Lee Rowley]

I am grateful for the kind offer. I point out that the statistics that I used are actual grants that have been issued, actual money that has been paid, and actual businesses in and around Streatham and Lambeth that have received support. I will decline her very kind invitation for one reason. Although I am extremely proud to call north-east Derbyshire my home, and to represent my home area in this place, when I am in London I live in Lambeth, in the constituency of the hon. Member for Vauxhall; we occasionally see each other on the tube. I spend quite a bit of time down Streatham High Road, so I have some experience of running around Clapham Common, and an understanding of all the fantastic businesses in the hon. Ladies’ constituencies. I recognise that there have been difficulties, but I have also seen great opportunity in those areas.

As a resident at times of Lambeth, there is something that I would encourage those in local politics to do. When I walked out of my house in Brixton this morning, I walked past glass on the road that has been there for three months because it has not been swept up by Lambeth Council. I walked past a tree stump that has not been replaced in the three years I have worked there. I walked through a low traffic neighbourhood that the Labour party has put in, which is not really wanted by residents in my part of Brixton. I walked through an alleyway that is graffitied to an incredible extent, and which nobody has cleaned up in the past few months. I walked down to Brixton tube station to come here today, and it looks shabby. It has not been cleaned up and it has graffiti up and down the walls. If Lambeth Council wants to do something to helps its constituents and businesses, I hope that it will consider concentrating on its core services, which people who spend a lot of time in Lambeth, as I do, would appreciate.

None the less, I am genuinely grateful to both hon. Ladies, and particularly to the hon. Member for Streatham for the points that she raised and for highlighting the challenges. I do not deny that there are challenges, but I hope that she and her constituents will accept that during a period of unprecedented health crises, when we have had to do things that we neither expected nor wanted to do, the Government have provided an unprecedented level of support not just for small businesses but for businesses across Streatham, Lambeth, the Greater London area and the country as a whole, including my constituency. We will see what we can do in the weeks, months and years ahead, recognising that it looks as if, as we all hope, we are moving into a new phase of the pandemic in which we learn to live with it, and ensure that we allow businesses to get on with doing what they do well, which is to create wealth, jobs and the tax revenue that can provide the good public services that we all want. I wish the hon. Ladies’ constituents and businesses in Lambeth all the luck in the world in taking the great opportunities in front of them. I look forward to hopefully taking part in some of them as a resident of London.

Motion lapsed (Standing Order No. 10(6)).