Notes on the Front

A number of measures have been justified on the basis of their impact on small business.  Postponing the Living Wage – impact on small business.  Postponing the extension of statutory sick pay – impact on small business.  Cutting VAT – impact on small business. Cutting ‘red tape’ – impact on small business.

The small business excuse can be quite anecdotal.  Minister Peter Burke stated:

“I've been in coffee shops and indeed restaurants where I've seen their margins diminish and some making a very significant loss that they weren't the prior year, considering in many cases their trade and turnover has sustained.”

Government policy seems to be made on the basis of where the Minister buys his caffe latte.  All manner of policies are being promoted to support SMEs which are purportedly under considerable pressure.

Yet the Government publishes survey data that directly contradicts this ‘under pressure’ excuse.

Every year, the Department of Finance publishes the SME Credit Demand Survey.  In it, they ask SMEs whether they ‘made a profit’, ‘made a loss’, or ‘broke even’.  This is what they found, going back to 2017.  

In 2024, 73 percent of SMEs made a profit.  While the covid years, especially 2020, saw an expected decline in profitability, it quickly recovered.  It is now higher than it was prior to covid (2019).    This hardly looks like a sector ‘under pressure’.

The survey also provides data by the size of SMEs.  Micro businesses employ less than 10 people; small businesses employ between 10 and 49 while medium enterprises employ 50 to 249.

Regardless of size, the number of profitable firms in 2024 exceed the pre-covid years.  In short, the percentage of SMEs in profit is historically high.

On the flip side, we find a low percentage of firms making a loss; namely 9 percent, or less than one-in-ten.  This is consistent with pre-covid trends.  The remainder of businesses broke even:  15 percent.

So the big question is why the Government insists that the ‘small business’ sector is under pressure when they are publishing data showing just the reverse;  that the overwhelming majority of SMEs – from micro to medium-sized businesses – are making a profit?  What are the real reasons behind the Government’s decisions to postpone the Living Wage, to postpone the extension of statutory sick pay, to deregulate, to cut taxes and completely suborn policy to a problem that doesn’t exist?

These questions should be asked over and over again until the Minister and the Government come forward with explanations backed up by evidence.