What small firms want from Healey's first Budget

As Chancellor John Healey prepares to deliver his first Budget next week, small business owners say rising costs are making it harder to grow, invest and create jobs.

From manufacturers and fuel suppliers to removal firms and clothing businesses, employers say they are facing pressure from higher employment costs, fuel prices and trading challenges, and want the government to do more to help.

However, Labour ministers face difficult choices as they try to support households and businesses while also meeting spending commitments, maintaining fiscal rules and managing higher borrowing costs.

The Institute for Fiscal Studies has warned the government could face a £35bn challenge if it wants to maintain public spending plans, increase defence spending and stay within existing fiscal constraints.

Tom Adams, who runs Stonemasons of Worcester and employs 12 people, said he wanted to expand his business but found it increasingly difficult because costs had risen.

"We've been around for 16 years and we've always grown, but the profit margins once everything has gone out have got smaller, mainly because the government is taking a bigger slice than ever," he said.

"With the Budget coming up I really hope they do something about it. The biggest one for us is National Insurance.

"It went from 13.8% to 15%, then they reduced the threshold from £9,100 to £5,000, so we got hit twice.

"Taxation is crippling businesses. It's getting hard to have money left in the pot to reinvest."

Ministers have argued that measures such as higher employer National Insurance contributions are necessary to help fund public services, while increases in the minimum wage are intended to boost workers' pay.

The government has also pointed to support through business rates changes and efforts to reduce regulation.

Last week, Healey announced plans to cut what he described as "form-filling and pointless paperwork", with ministers claiming the changes could save businesses up to £800m.

For some firms, however, taxes are not the only concern.

Deb Price, chief executive of British Boxers in Leek, said trading with European customers remained more complicated than before.

"Andy Burnham's been talking about having closer ties with Europe," she said.

"I know it won't be popular for everyone, but for businesses it makes things so much easier.

"We do trade now with Europe but it's so complicated compared to before. It's the thing we're finding really difficult."

Concerns about costs were also echoed by Emma Osborn, who runs Halso UK Fuels in Lichfield.

She said customers across a range of sectors were becoming more cautious with their spending.

"The last six months have been really challenging," she said.

"We deal with farming, commercial, haulage businesses and domestic customers. Everyone is struggling.

"On the domestic side a lot of people are more hesitant about buying fuel. They're waiting for the prices to drop and calling regularly to see if it's gone down.

"We've had customers crying on the phone."

She said she would welcome action on fuel costs, arguing that businesses and households alike needed further support.

Fuel duty has been frozen since 2022 and the government extended a temporary 5p cut earlier this year, but there is speculation over whether the freeze will continue beyond the end of 2026.

For businesses that rely heavily on transport, fuel remains one of their largest expenses.

Joe Phillips, who runs Worcester-based AJ's Removals and operates across the UK, said diesel costs continued to affect the company's finances.

"We've been as far north as Fort William and Inverness, and down to Land's End," he said.

"We can't switch to electric vehicles, so we're basically stuck with diesel.

"We could do with some help from the government. They need to look at small businesses and think, 'What could we do to make sure these businesses keep going?'"

A Treasury spokesperson said the government was "on the side of business".

They pointed to a 20% reduction in business rates for pubs, social clubs and live music venues, plans to cap corporation tax and measures designed to reduce bureaucracy.

"As has always been the case, decisions on tax are a matter for the chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals," the spokesperson said.

Follow BBC Hereford & Worcester on BBC Sounds, Facebook, X and Instagram.