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‘Tsunami of closures’ warned as indie debt increases fivefold

‘Tsunami of closures’ warned as indie debt increases fivefold
Photo: iStock

The debt of independent businesses has increased five times during the pandemic which could lead to a fresh wave of store closures, a new Grimsey Review report has warned.

The report, which focused on independent retailers, hospitality providers and service businesses, has found the combined debt of these three sectors has risen from £0.5 billion at the start of the pandemic to £2.5bn in March 2021.


“Most have been forced to take on unsustainable levels of debt and many are teetering on the brink as a result. Urgent support is required to stop a tsunami of closures,” the report noted.

Noting that the small businesses have had a raw deal during the pandemic, the review has called for a ‘comprehensive forgiveness scheme’ for dealing with the anticipated loan defaults so that the uncontrolled collapse of independent businesses can be avoided and help viable but over-indebted companies survive.

“Given there are almost 150,000 small independent businesses out there that face five times the debt they had going into the pandemic, there is going to be a significant number of business failures and a large part of that debt will default,” Bill Grimsey, former boss of Wickes and Iceland, said.

“These people need urgent help and understanding and should be seen as a critically important cohort of independent businesses at the heart of communities up and down the country.”

The review has also called for an extension of the business rates holiday for all non-essential retailers, hospitality and service providers until April 2022, and a review in January next year to decide on further extension.

“Business rates remains a broken and outdated taxation model, which urgently needs an overhaul, as it’s holding high streets back,” the review noted.

“If the G7 nations can come together to make a global agreement on the taxation of multinationals then surely our government can get on with reforming business rates. The planned review for this autumn must be bold and decisive. Government can no longer afford to kick this problem down the road.”

Terming the tax system as “fundamentally unfair” to small businesses, the review urged the HMRC to play a constructive role in business rescues aimed at helping independent businesses owners wean themselves off the government’s coronavirus support schemes, such as VAT/PAYE deferrals, the bans on rent arrears enforcement and on the issuance of Winding Up Petitions.

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The Federation of Independent Retailers (The Fed) has launched an exclusive benefits scheme for Fed members.

Called FedPlus, the scheme offers a range of discounts on a host of goods and activities, from everyday purchases to luxury products.

Through FedPlus, Fed members will have access to a range of fantastic money-saving benefits covering a wide variety of areas – from health and well-being to home and car essentials, and from food and drink to fashion and tech, entertainment, travel and experiences.

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Members can access the scheme through thefedonline.com website. It went live yesterday (October 31).

FedPlus is managed and run for the Fed by Parliament Hill Limited, which has been providing benefit management solutions for membership organisations for the past 20 years. Top name companies offering discounts include Virgin Experience Days, Nuffield Health, Hotpoint, Halfords, Boots, Curry’s and EE.

Tom Sparke, joint managing director and client services director at Parliament Hill, said: “We are looking forward to working with the Fed to assist them in the fantastic support that it provides for its members.

“The Fed has a strong commitment to supporting its members, which aligns with the Parliament Hill ethos of placing the needs of our clients’ members at the heart of what we do.”