Hundreds of thousands of the UK’s smallest businesses risk going under this year as costs keep rising, a report has revealed.
The owners of nearly one in eight microbusinesses, defined as employing fewer than 10 people, fear they will have to fold, equating to 630,000 businesses.
Catherine Sweet sells art for a living – both her own and that of other artists – via her website BobCat Gallery and at exhibitions she puts on.
Image: Small business owner Catherine Sweet
But she says “a massive decline in consumer spending” coupled with rising living costs is a disaster for businesses.
“I know that my business could grow fivefold If I had a physical space, but every negotiation I have entered into with the landlord has come to nothing because I do not have the funds right now.
“Affordable rent subsidies for retail premises would be a huge boon, because for businesses like mine, having physical premises would be a game changer, but it’s completely out of our reach,” she said.
And Catherine is not alone.
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The annual Venture Forward study by website builder GoDaddy found that only a fifth of microbusiness owners think the government is doing enough.
More than three quarters also described the cost of living crisis as the greatest challenge they’ve ever faced, with the price of energy the biggest single concern.
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According to Andrew Gradon, GoDaddy’s UK manager, microbusinesses represent 96% of all businesses within the country’s private sector.
“They are the lifeblood of businesses in the UK and it’s them that are on the frontline very much feeling the direct impact of the cost of living crisis,” he said.
“Around 42% said that they wanted support with tax incentives but also looking more broadly to business support – so looking at technical assistance for business development as well as support for digital strategy.”
The study estimates that if the 12% of microbusinesses under threat went under, it would wipe £12bn from the economy.
The data also shows that the cost of living crisis is having a disproportionate impact on microbusinesses owned by underrepresented entrepreneurs.
A total of 85% of black entrepreneurs described it as the worst time they can remember, as did 84% of those who are Asian compared with 75% of white entrepreneurs.
A government spokesperson told Sky News: “We recognise that companies are struggling with energy bills which is why the government is providing businesses with billions of pounds of support.
“This support means some will be paying around half of predicted wholesale energy costs this winter. We’ve pledged further energy support from April onwards.”
Superintendent Jen Appleford, from Avon and Somerset Police, said the community was in shock and Aria’s family were being supported by police.
“It is impossible to adequately describe how traumatic the past 36 hours have been for them and we’d like to reiterate in the strongest possible terms their request for privacy,” she said.
Supt Appleford said police were working with local schools and other agencies to make sure support is available.
The Duke of Marlborough, formerly known as Jamie Blandford, has been charged with intentional strangulation.
Charles James Spencer-Churchill, a relative of Sir Winston Churchill and Diana, Princess of Wales, is accused of three offences between November 2022 and May 2024, Thames Valley Police said.
The 70-year-old has been summonsed to appear at Oxford Magistrates’ Court on Thursday, following his arrest in May last year.
The three charges of non-fatal intentional strangulation are alleged to have taken place in Woodstock, Oxfordshire, against the same person.
Spencer-Churchill, known to his family as Jamie, is the 12th Duke of Marlborough and a member of one of Britain’s most aristocratic families.
He is well known to have battled with drug addiction in the past.
Spencer-Churchill inherited his dukedom in 2014, following the death of his father, the 11th Duke of Marlborough.
Prior to this, the twice-married Spencer-Churchill was the Marquess of Blandford, and also known as Jamie Blandford.
His ancestral family home is Sir Winston’s birthplace, the 300-year-old Blenheim Palace in Woodstock.
But the duke does not own the 18th century baroque palace – and has no role in the running of the residence and vast estate.
The palace is a Unesco World Heritage Site and a popular visitor attraction with parklands designed by “Capability” Brown.
In 1994, the late duke brought legal action to ensure his son and heir would not be able to take control of the family seat.
Blenheim is owned and managed by the Blenheim Palace Heritage Foundation.
A spokesperson for the foundation said: “Blenheim Palace Heritage Foundation is aware legal proceedings have been brought against the Duke of Marlborough.
“The foundation is unable to comment on the charges, which relate to the duke’s personal conduct and private life, and which are subject to live, criminal proceedings.
“The foundation is not owned or managed by the Duke of Marlborough, but by independent entities run by boards of trustees.”
The King hosted a reception at Blenheim Palace for European leaders in July last year, and the Queen, then the Duchess of Cornwall, joined Spencer-Churchill for the reveal of a bust of Sir Winston in the Blenheim grounds in 2015.
The palace was also the scene of the theft of a £4.75m golden toilet in 2019 after thieves smashed their way into the palace during a heist.
The duke’s representatives have been approached for comment.
We’re estimated to consume 8.2kg each every year, a good chunk of it at Christmas, but the cost of that everyday luxury habit has been rising fast.
Whitakers have been making chocolate in Skipton in North Yorkshire for 135 years, but they have never experienced price pressures as extreme as those in the last five.
“We buy liquid chocolate and since 2023, the price of our chocolate has doubled,” explains William Whitaker, the real-life Willy Wonka and the fourth generation of the family to run the business.
Image: William Whitaker, managing director of the company
“It could have been worse. If we hadn’t been contracted [with a supplier], it would have trebled.
“That represents a £5,000 per-tonne increase, and we use a thousand tonnes a year. And we only sell £12-£13m of product, so it’s a massive effect.”
Whitakers makes 10 million pieces of chocolate a week in a factory on the much-expanded site of the original bakery where the business began.
Automated production lines snake through the site moulding, cutting, cooling, coating and wrapping a relentless procession of fondants, cremes, crisps and pure chocolate products for customers, including own-brand retail, supermarkets, and the catering trade.
Steepest inflation in the business
All of them have faced price increases as Whitakers has grappled with some of the steepest inflation in the food business.
Cocoa prices have soared in the last two years, largely because of a succession of poor cocoa harvests in West Africa, where Ghana and the Ivory Coast produce around two-thirds of global supply.
A combination of drought and crop disease cut global output by around 14% last year, pushing consumer prices in the other direction, with chocolate inflation passing 17% in the UK in October.
Skimpflation and shrinkflation
Some major brands have responded by cutting the chocolate content of products – “skimpflation” – or charging more for less – “shrinkflation”.
Household-name brands including Penguin and Club have cut the cocoa and milk solid content so far they can no longer be classified as chocolate, and are marketed instead as “chocolate-flavour”.
Whitakers have stuck to their recipes and product sizes, choosing to pass price increases on to customers while adapting products to the new market conditions.
“Not only are major brands putting up prices over 20%, sometimes 40%, they’ve also reduced the size of their pieces and sometimes the ingredients,” says William Whitaker.
“We haven’t done any of that. We knew that long-term, the market will fall again, and that happier days will return.
“We’ve introduced new products where we’ve used chocolate as a coating rather than a solid chocolate because the centre, which is sugar-based, is cheaper than the chocolate.
“We’ve got a big product range of fondant creams, and others like gingers and Brazil nuts, where we’re using that chocolate as a coating.”
Image: The costs are adding up
A deluge of price rises
Brazil nuts have enjoyed their own spike in price, more than doubling to £15,000 a tonne at one stage.
On top of commodity prices determined by markets beyond their control, Whitakers face the same inflationary pressures as other UK businesses.
“We’ve had the minimum wage increasing every year, we had the national insurance rise last year, and sort of hidden a little bit in this budget is a business rate increase.
“This is a small business, we turn over £12m, but our rates will go up nearly £100,000 next year before any other costs.
“If you add up all the cocoa and all the other cost increases in 2024 and 2025, it’s nearly £3m of cost increases we’ve had to bear. Some of that is returning to a little normality. It does test the relevance of what you do.”