Nearly 150,000 small businesses in the UK, including many umbrella company workers and limited company contractors, are facing fears that they may become insolvent if they cannot maintain their contracts with the public sector.
According to recent research conducted by insolvency experts R3, this reflects an overarching trend wherein one out of three small businesses feel they rely on public sector contracts in order to remain viable in their chosen markets. As last year’s business failure figures were approximately 26,000 for the entire year, the number of businesses skirting insolvency this year is dramatically higher.
Steven Law, president of R3, commented on the trade organisation’s findings by saying that while the likelihood of all 150,000 businesses losing their public sector contracts is quite low, the UK’s large number of small businesses who rely on contracts with the public sector, which have been de rigueur since the 1990’s, any cuts at all from the public sector will be quite keenly felt.
Mr Law concluded by saying that British businesses had an obligation to not only keep this risk in mind but also to seek out professional business advice well before any crises arise due to their public sector contracts drying up.
In related news,the Coalition government’s new National Insurance Contributions holiday, which was instituted in order to drive the growth of new business, is considered to be unlikely in regards to compensation for heavy public sector losses, says IntaPeople.
The Engineering, IT, and Legal recruitment specialist warned of such an event after the new holiday was introduced this past week.
The new scheme offers up to £5,000 to new businesses for taking on up to ten new employees during the first year of its operation under the scheme, which is geared towards business growth outside of the City, the South-East, and the South.
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