The Federation of Small Businesses has written to the Chancellor outlining the measures it says are needed for its members to bounce back from recession.

Support for small businesses and the self-employed has been central to the Government's emergency measures during the coronavirus pandemic.

And the FSB is calling on Rishi Sunak has called for a similar approach in recovery plans.

In the letter, FSB chairman Mike Cherry warned "against excessive pessimism", arguing "a strong recovery is possible" so long as "further fiscal response... is calibrated to the extent of continuing temporary restrictions."

Reiterating its call on a reduction of the two-metre social distancing guideline, the letter also called for introduction of back to work vouchers to cover the costs of on-site safety adjustments.

Research shows 86 per cent of small businesses say they need to make changes to their premises to reopen safely with 28 per cent saying it would cost more than £1,000 for the necessary work.

Mr Cherry said: "The fundamental question facing small businesses is: can I open in a way that's both commercially viable and safe?

"Among those for whom the answer is yes, the majority will face additional costs as they adjust their operations. The Government should step in with back to work vouchers so firms doing the right thing can recover this expenditure.

"Our hope is that the gradual unwinding of the furlough scheme coincides with a gradual return of more normal levels of economic activity."

Among the measures called for by the group to protect livelihoods as the Job Retention Scheme is wound down are:

• Cutting employer's National Insurance Contributions or uprating the targeted Employment Allowance, while extending NIC holidays.
• Assisting small firms with apprenticeship training and wage costs as part of an apprenticeship guarantee, alongside a large-scale employment programme for young people akin to the Future Jobs Fund.
• A full statutory sick pay rebate, or alternative mechanism, for all who need to self-isolate as the track and trace programme is rolled out or experience secondary health conditions after isolating in the past.

Mr Cherry said: "Millions of small firms and sole traders have been helped by emergency support mechanisms but hundreds of thousands have not.

"As we look to recover, the Chancellor should ensure those who have fallen through the gaps are not punished further with tax rises or exclusion from new stimulus measures.

"Many have secured bounce back and interruption loans to cover fixed costs as revenue disappeared through no fault of their own. What we have to avoid is a situation where small firms have one eye on repayments so hold fire on investment and hiring at a moment when we need them most."

The letter called on the Chancellor to shore up cashflow, balance sheets and investment by:

• Ensuring discretionary grants reach those who have fallen through the cracks of support schemes.
• Taking a student loan-style approach to state-backed emergency loans, allowing firms to start repayments once they are making a profit.
• Widening access to R&D tax credits and introducing digital vouchers to encourage new-to-firm innovation.
• Considering a temporary reduction in VAT and other measures to jump-start the economy.