Next week’s Budget should put in place radical measures aimed at helping small firms spearhead economic recovery by employing more people.
In its budget submission, the Forum of Private Business (FPB) argues that a complete rethink of workplace legislation is needed in order to allow smaller companies to lead the country out of recession.
The Forum also wants to see several key tax incentives put in place to encourage small businesses to employ more people and grow. This will bring in more revenue for the Government without increasing the rate of tax.
Additionally, the small business support and lobby group is calling for confusion over HM Revenue and Customs’ (HMRC’s) flagship tax deferral scheme to be cleared up.
Its submission, entitled ‘Rebuilding the UK Economy’, contains four key proposals.
Firstly, the Forum is calling for the Government to implement a comprehensive regulatory review. This would involve looking at workplace legislation from the point of view of the businesses that have to comply with it and removing or simplifying problematic regulation wherever possible.
Secondly, it wants to see plans to increase the small companies’ rate of corporation tax scrapped. This would provide a higher level of certainty for small firms and help recession-hit businesses maintain their profitability.
Thirdly, the planned increase in National Insurance Contributions (NICs) should be scrapped. The Forum has joined a coalition of business groups opposing the increase and has also gone further by calling for NIC reductions for micro businesses that take on new staff.
Finally, the Forum is calling for certainty to be provided around HMRC’s Business Payment Support Service. Confusion around the terms of the programme and its interaction with the existing Time to Pay scheme has caused problems for some business owners and the Forum wants this to be cleared up.
Commenting on the Budget submission, the Forum of Private Business’ Policy Representative Matthew Goodman said, “This Budget is about getting the environment right for businesses to take advantage of the opportunities that 2010 will bring.
“It’s often been said, but small businesses are the backbone of the British economy. By focusing on real change in a few key areas, the Government could help itself because small firms would then pull the country out of the economic doldrums.”
Mr Goodman continued, “The Forum believes that a comprehensive regulatory review is necessary in order to take stock of the myriad of new laws that have been imposed on businesses in recent years. The policymakers are usually well-meaning, but often fail to take into account the cumulative impact regulations have on small businesses.
“We also believe the planned rises in NICs and the small companies’ rate of corporation tax should be scrapped straight away. What’s more, we believe that these are entirely realistic goals. The Government does have a huge deficit to pay off, but it won’t accomplish that through imposing ever-higher taxes on an ever-dwindling number of businesses.
“Give businesses some certainty on compliance and let them keep more of their taxes for the next year, and watch how the money starts to move again. We all know that more businesses doing more trade and employing more people will lead to more income for the Treasury in the long run.
“That’s the only way we can ultimately get the country back into the black.”
In this year’s Budget submission, the Forum avoided drawing up an extensive ‘wish list’ of specific policies to reflect the reality of the looming general election.
Instead, it sought to emphasise a number of key principles which it believes will make conditions better for the country’s smaller firms. Those principles include:
- Driving growth by improving market conditions
- Reducing the government deficit
- Providing continued support programmes to small and medium-sized businesses
- Strengthening traditional sectors through access to new technologies and new markets for goods and services.
The Forum’s submission also called for the public procurement process to be made fairer for small firms. Additionally, it would like to see more work aimed at tackling late payment and unfair competition, and for the Government to improve the market in alternative sources of funding for small businesses struggling to access finance.
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