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Is there really 3 million unsupported companies

I keep hearing this number but is it really 3m.

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I keep hearing about 3m unsupported businesses in the current Covid crisis but where do these numbers come from.

As I understand it there is 5m businesses in the UK, of which I undertand there is maybe 1m Ltd Co.

As the economy dropped 25% I am assuming that 75% of companies were working as normal or doing some sort of activity all be it at reduced levels

With 9m staff on furlough, grants to people with premises, CBILS, BBL etc how can 3m businesses have fallen through the cracks.

I accept some staff who moved jobs in Feb/March may have missed furlough dates and some newly self employed may have missed out on the SEISS but cannot get anywhere near the 3m constantly passed around. There is only small company directors who have maybe been missed out. So if there 1m Ltd Co say 750k are owner managed. But surely a good part of them must have been able to do some trade throughout, so maybe a few hundred thousand directors have had to live on their wits personally but there business has been supported if they have staff.

There is 300k names signed the forgotten Ltd campiagn which would seem to me to more realistic as to the number that have slipped through the gap and the 3m has no foundation at all.

When I  explained to my clients there was limited support for directors they just got on with it and then went about changing the business to earn some money or plan for relaunch. 

So is the 3m forgotten business just FOMO in that they wish they got the free money sole traders got or is there anything in it as I just don't see it. (yet)

Replies (22)

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RLI
By lionofludesch
15th Jul 2020 16:38

Depends what you mean by unsupported.

Technically, furloughing supports the employee, not the company, so I suppose any of those companies could be considered unsupported.

Discount CJRS and you're left with the grants. If that's the measure, perhaps it's not that far out.

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Replying to lionofludesch:
Glenn Martin
By Glenn Martin
15th Jul 2020 16:48

The CJRS schemes takes over the burden of paying the staff wages which is the responsibility of the company so most directors I work with were over the moon with the scheme as it left their own reserves intact, so I cannot see how that is not equally supporting the company.

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Replying to Glennzy:
RLI
By lionofludesch
15th Jul 2020 16:55

Glennzy wrote:

The CJRS schemes takes over the burden of paying the staff wages which is the responsibility of the company so most directors I work with were over the moon with the scheme as it left their own reserves intact, so I cannot see how that is not equally supporting the company.

They could have laid the workers off.

What did the company make out of CJRS ? Hopefully nothing as they declared they were passing it on, in its entirety, to the employee.

From August, it'll cost larger companies to keep folk at home, doing nothing. From September, small companies will be sucked in too.

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Replying to lionofludesch:
Glenn Martin
By Glenn Martin
15th Jul 2020 17:01

Its not a case of making out of it its still support as without it they would have had to make staff redundant pay up all holidays, notice periods etc which would have cost the company.

Before the support was announced discussions I was having with clients where how long could we support staff without income before cuts needed to be made. Most saw the the furlough scheme as a big thing as there were no support offered like this in 2008.

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Replying to Glennzy:
RLI
By lionofludesch
15th Jul 2020 17:05

Glennzy wrote:

Its not a case of making out of it its still support as without it they would have had to make staff redundant pay up all holidays, notice periods etc which would have cost the company.

Take your point but they'd have owed holiday money anyway. Keeping them on furlough means the employees accrue more holiday but the company gets no work out of the employee. So you could argue that the company is worse off by accepting CJRS.

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Replying to lionofludesch:
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By legerman
16th Jul 2020 10:15

lionofludesch wrote:

Take your point but they'd have owed holiday money anyway. Keeping them on furlough means the employees accrue more holiday but the company gets no work out of the employee. So you could argue that the company is worse off by accepting CJRS.

The way around this is to tell workers they have to take a holiday whilst furloughed, subject to the required notice. I guess that benefits the employer because they only need to top up to the normal pay but at the same time it would be unfair for employers to have to stand nearly 6 weeks pay for potentially half a year.

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Replying to legerman:
RLI
By lionofludesch
16th Jul 2020 10:29

legerman wrote:

The way around this is to tell workers they have to take a holiday whilst furloughed, subject to the required notice. I guess that benefits the employer because they only need to top up to the normal pay but at the same time it would be unfair for employers to have to stand nearly 6 weeks pay for potentially half a year.

Still leaves the employer out of pocket and not "supported" by CJRS.

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By Tim Vane
15th Jul 2020 17:22

At last count there were over 5 million self-employed people in the UK, plus over 2 million trading companies, so that's over 7 million already. Even if more than half of them were supported, 3 million may not be.

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Stepurhan
By stepurhan
15th Jul 2020 17:32

Glenn Martin wrote:
I keep hearing about 3m unsupported businesses in the current Covid crisis but where do these numbers come from.
You follow this statement with a list of numbers of your own. You have not provided as source for these numbers.

So where do your numbers come from? It is impossible to have a sensible discussion about this without numbers from a reliable source to form the basis for debate.

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Replying to stepurhan:
RLI
By lionofludesch
15th Jul 2020 17:43

I'm not sure you could draw a conclusion anyway.

You'd need to set parameters and, even then, it's not a black and white issue.

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Replying to lionofludesch:
Stepurhan
By stepurhan
15th Jul 2020 17:53

As you say, it's not going to be a black and white issue.

But the accurate numbers of businesses and limited companies at least would give a solid start for discussion. The OPs starting position is that the 3 million he has heard (a source for that would be good too) is 60% of total businesses. It does seem unlikely (though not impossible) that 60% of businesses have not received support. Since OP's original argument appears to depend on this percentage being unreasonably high, knowing if it is matters.

There are a lot of interesting areas for discussion beyond the numbers though. Whether CJRS has helped businesses, or simply pushed back the inevitable for many, is one of those.

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By alfredpennypinch
15th Jul 2020 17:54

Glennzy wrote:

I keep hearing about 3m unsupported businesses in the current Covid crisis but where do these numbers come from.

It's not 3million businesses.

I've seen references to 3million individuals either wholly or partially denied support (ExcludeUK) broken down as:

200k newly self employed
225k self employed but earning in excess of £50k trading profits
1,175m earning less than 50% of income from self employment
300k new starters
100k denied furlough
390k PAYE freelancers
710k Ltd company directors

Total 3.1 million.

Also there are references to 3 million households that had lost income but were not covered by support schemes (Standard Life Foundation). This is roughly broken down as:

24% where an earner in the household lost their job and became unemployed
21% where the household had a reduction in income (can't say why they didn't qualify for furlough)
10% were "marginal employees" (working fewer than 8 hours a week)
41% earner is self employed but doesn't (or doesn't expect to) qualify for SEISS
4% Unspecified

We can argue about overlap of categories in both reports and I don't personally count all of those as truly "unsupported", but that's where the numbers come from.

Glennzy wrote:

When I explained to my clients there was limited support for directors they just got on with it and then went about changing the business to earn some money or plan for relaunch.

Lacking support is not the same as complaining about it. Yes, they just got on with it, but that doesn't make them any more supported by the government.

Glennzy wrote:

So is the 3m forgotten business just FOMO in that they wish they got the free money sole traders got or is there anything in it as I just don't see it.

The point is not all sole traders who need support are getting it. Not all employees who need support are getting anything. Not all company directors who need support are getting anything. We can argue about whether the number is 3million, but to characterise it as FOMO would be unnecessarily dismissive.

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Replying to alfredpennypinch:
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By alfredpennypinch
15th Jul 2020 17:59

I should add that whenever something like this pops up and it's a nice round number, it's almost always either dodgy and/or a headline grab rather than a properly accurate figure.

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Replying to alfredpennypinch:
Glenn Martin
By Glenn Martin
16th Jul 2020 09:58

I thought you were still allowed an opinion on this site but anyway, I have had several conversations with Directors who are still trading maybe at slightly lower levels, and with reserves in the company who feel they should have something as Dave the plumber he knows got £7500 and only missed a week off work. So very clearly he feels he should get something simply because someone else got something whether they need support or not.

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Replying to Glennzy:
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By alfredpennypinch
16th Jul 2020 12:59

You don't say so I assume you're talking specifically about my saying that characterising all who say they are "unsupported" as FOMO is unnecessarily dismissive, but regardless - at no point did I criticise you for having an opinion (if that's what it was, since you phrased it as a question but didn't include the customary punctuation).

And just like the anecdotal non-complaining directors in your first post didn't show whether or not those directors needed support, the anecdotal complaining directors in your reply here don't show that all complaining of lack of support are merely suffering from FOMO.

In clutching your pearls about my reprehensible and dastardly challenge to (what turns out to be) your opinion, you also haven't addressed that it's not and never was 3million businesses (companies or otherwise - you seem confused on the point) that are considered (by those writing the reports, if nobody else) to be unsupported. Or Stepurhan's point about a source for your own numbers.

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By ireallyshouldknowthisbut
15th Jul 2020 18:37

How many millions are getting support and don't need it?

I have several clients perfectly legally entitled to claim, but don't need the cash but took it anyhow as they are the entitled type. One had covid as the stupid twonk went skiing in March.

Don't forget a lot of companies are second or third businesses, or sidelines, or the old "trying to protect my trading name" silliness.

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Hallerud at Easter
By DJKL
16th Jul 2020 09:42

I think your assumption is flawed, you say

"As the economy dropped 25% I am assuming that 75% of companies were working as normal or doing some sort of activity all be it at reduced levels"

This assumes that all economic activity derives from business. However I have a strong suspicion that it was the measurement of GDP that dropped 25%, business of course does not actually feature within the traditional measurement of GDP being a mere conduit for spending, as you will recall from economics , GDP=C+I+G+(X-M).

Given G increased massively via government support directly to business and via business to individuals, yet still GDP dropped 25%, I would surmise that business activity actually dropped far, far more than 25%.

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Replying to DJKL:
Glenn Martin
By Glenn Martin
16th Jul 2020 10:04

The Xero data released based on 600k companies showed a drop in revenues of 25%, whilst some businesses totally ceased trading, many carried on trading from home or online etc and many traded up through the period.

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Replying to Glennzy:
Hallerud at Easter
By DJKL
16th Jul 2020 12:17

So the Xero data is not really a representation of the economy, it is data re turnover for a segment of the SME business entities that are within the economy.

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Hallerud at Easter
By DJKL
16th Jul 2020 09:52

We have not been eligible for support and we have not signed up for any campaigns, beyond deferring one vat quarter's payment and I will defer the July payments re IT ,no other reliefs apply.

For the stats that covers three active companies and an active partnership.

Having said that we have received some income, just not as much as we ought to have

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Replying to DJKL:
Glenn Martin
By Glenn Martin
16th Jul 2020 10:06

But do you feel you needed supporting through the period and have missed out

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Replying to Glennzy:
Hallerud at Easter
By DJKL
16th Jul 2020 10:34

No- we are fine. (We carry decent cash reserves)

We are income wise down circa £60k at present(though currently merely deferred not lost, though of course may well become lost) and depending when the dust settles I can see this rising up to nearer £120k-£200k. We are also likely to drop from near 100% occupancy rates as tenants give up (already happening) and I expect rent levels re relets will soften and it will be a rough 2-3 years with voids in the portfolio,but like Gloria Gaymor we will survive.

But there will be numerous unsupported business entities in our industry and some will not have our financial strength (in fact I know some don't as one hears rumours as to who, locally, may be in trouble), in our case we are wrong activity to receive support (we lease commercial property to others) but we are certainly a business, we are organised as a business, have offices etc, regularly pay hefty tax bills to HMG, but as we do not generally employ staff (I am now the only employee) and as we buy in services and their staff from other business entities, virtually all the reliefs wash over us.

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