SMEs lack faith in the budget
Small businesses are reported to be lacking faith in the upcoming Budget to get them through the recession
A quarter of small businesses fear going under if the economy doesn’t turn around in the next year while a massive 75% feel the UK government should do more to help, according to a new survey.
In research conducted by Intuit, the provider of QuickBooks business and financial management solutions, small businesses expressed their disillusionment at government attempts to address their needs. More specifically, only 10% of respondents believe that the annual Budget in April 2009 will include measures that will have a positive impact on their businesses.
Furthermore, relatively few small businesses have seen or expect to see actual benefits from the initiatives announced in the Pre-Budget Report published in November 2008. Only 11% of respondents said that these initiatives, such as the additional tax relief to businesses making losses, have helped their business. The most popular measure in the Pre-Budget Report was the VAT reduction, with 23% of respondents claiming this had helped their business, but even that figure was small in comparison to the 56% who felt none of the key initiatives for small businesses had benefitted them.
Instead, small businesses said the issues that most affect them and which they would like to see the Budget tackle are unfavourable bank charges (50%) and late payments (40%). Based on feedback from respondents, Intuit has identified a wish list of the five most popular measures small businesses would like to see announced in April:
- Reduction of employers’ National Insurance contribution rate (46%)
- Tighter government control over bank charges (33%)
- Further deferment of the rate increase of corporation tax (27%)
- Further measures to ensure late payments are reduced (21%)
- Extension of VAT reduction to 15 per cent for a further 12 months (21%)
Diana Flier, compliance analyst at Intuit UK, says that small businesses should be getting more support as they play such an integral role in Britain’s economy, employing an estimated 22.7 million people.
"Small businesses face a number of challenges in the present downturn. They are being squeezed by larger companies extending credit terms while the government is clearly failing to help their situation. While in the long term there are benefits to the VAT reduction, hence the demand for its extension, in the short term it was painful for businesses to implement the changes.
"In such a tough economic environment, small businesses want to manage their costs more efficiently, which would explain why the reduction of employers’ National Insurance contribution rate has come out on top of the wish list. Given the low confidence shown by small businesses in the survey, it is clear the government really needs to do more to help and the Budget presents that opportunity to address their most pressing needs.
"But small businesses can also help themselves by adopting best practices in financial management. This involves being aware of how much money is being spent, tracking VAT and making accurate returns, and identifying potential cash flow problems before they occur. This calls for processes to monitor and track finances, as well as to prepare a cash flow forecast."
The survey results are based on responses from 234 of Intuit’s small business customers in the UK and was conducted online in March 2009.
A little under 2 weeks ago the CBI were calling for the budget to build confidence & fairness.