Chamber issues 5 point plan to Government to help businesses struggling with soaring costs | April 2022

Survey highlights impact of ‘perfect storm’ driven by rising fuel, freight & other costs

Date: Saturday 02 April 2022

Isle of Man Chamber of Commerce has requested an urgent meeting with the Department for Enterprise and Treasury Ministers to discuss its members’ concerns about rising costs.

The Island’s biggest business network says rising fuel, freight and other costs have created a ‘perfect storm’ that means businesses are now under more financial pressure than at any time during the pandemic.

That view is backed by the results of a recent Chamber survey about the rising cost of doing business here on the Island. A total of 157 local firms took part, with 35% saying they have seen major reductions in their revenues compared to 2019. Soaring fuel costs are the most important factor with 80% citing it as having the biggest impact, followed by (in order of importance) the cost of freight, raw materials and wages.

Chamber Chief Executive, Rebecca George, says the survey is just the latest evidence which shows the severity of how businesses are being affected by inflation and rising costs across the board. “Businesses, especially small businesses that are right at the heart of our community, need help from Government to weather this storm,” she said. “Our research has shown that businesses are drowning in a rising tide of costs with the latest survey results revealing that many are now also under extreme pressure from spiralling energy and freight costs, as well as increased wages. The majority are having to increase prices, and many are also considering scaling back services to cut costs, or thinking about making redundancies.”

She continued: “All of this has a domino effect on other firms in the supply chain, and the economy. But, in addition to the financial and economic impacts, it’s also important to consider the human cost in terms of health and wellbeing. Anxiety about the future leads to increased stress levels for owners, employees, and their families. Customers, suppliers and everyone else who relies on businesses that play such an important role in the local community are being affected too – so this is not just a ‘business’ issue. ”

The Chamber of Commerce – which represents businesses that employ 20,000 people which is approximately half of the Island’s private sector workforce – has set out a five-point plan to help businesses ride out the current storm.

Rebecca George added: “We have been working with the Manx NFU, Construction Isle of Man and LVA [Licensed Victuallers Association] to identify the five most important actions Government must take urgently to help businesses. Chamber believes only through all sectors in our local economy working together can we help each other to deal with this impending crisis”

Here is Chamber’s five-point plan:

1. Targeted support for the food supply chain, hospitality/hotels, and small to medium retail firms. This would, says Chamber, enable businesses to absorb costs rather than passing them all onto consumers. Any financial relief should include producers, distributors and suppliers as well as businesses in retail and hospitality settings.
2. To address the workforce shortage, Chamber is calling for….
     The introduction of a temporary 12-month worker’s visa, and the lifting of work permits.
     Schemes to encourage the 10,000 economically active people into the workplace.
3. Chamber also wants to see the 'second job tax’ removed.
4. Introduce a freight charge subsidy for Manx retail and hospitality businesses.
5. Extend the 12.5% VAT rate for hospitality. The current reduced VAT rate is due to end on March 31st this year and will burden venues with yet another cost. Extending the reduced rate will help venues absorb significant energy costs. Create a carve-out similar to the 5% VAT for buildings and construction.

Other headlines from Chamber’s cost of business survey include:
• 36% of respondents stated that they expect to increase their prices by between 6 and 10%
• 24% said they expect to increase prices by 24% with over half of respondents expecting these increases to come into effect as early as April.
• If price increases do not have enough of an impact, then 39% of the businesses that responded said they will need to cut costs; 37% said they will need to scale their business back; and 33% said they will have to consider making redundancies.

Click here to view dashboard results.