Business Groups: Budget 2012 Must Boost Business Confidence
Small business groups have called on the Chancellor to introduce measures that will boost shaky business confidence when he unveils his 2012 Budget on 21 March.
Tax incentives to stimulate investment, accelerated employment reform to encourage businesses to hire and public sector procurement that favours small firms are all on the wish list for business groups ahead of the Budget speech.
“The Chancellor has already said there’s going to be no massive giveaways,”
said a spokeswoman for the Federation of Small Businesses (FSB).
“We’ve asked that if there’s going to be an area where the Government intervenes, to make sure that it really will have an impact on improving business and consumer confidence, because that’s one of the big things that’s stopping growth at the moment.”
The FSB has also called for a simplified ‘turnover tax’ for the smallest businesses which would see them paying a flat rate on turnover, rather than calculating a variety of different taxes. A report by the Office of Tax Simplification has suggested that two million businesses with turnover of less than £30,000 would benefit from a simplified tax regime along these lines.
“There’s growing evidence to suggest it’s simply not pulling in the necessary take. Neither is it doing anything to encourage entrepreneurship. On balance therefore, it’s a policy that’s not working,” an FPB spokesman said.
The FPB has also said the Chancellor should reconsider plans not to scrap the planned 3p fuel duty increase in August, arguing that “economic recovery would be strangled at birth” if fuel prices continue to increase. In addition, the group is calling for a 2% cap on business rates, which are due to rise by 5.6% this year despite lower inflation.
Red tape cuts
Both the FSB and the British Chambers of Commerce (BCC) said that red tape cuts, introduced last year, needed to be accelerated. With unemployment high, and rising, they argued that the Chancellor has to act to encourage businesses to overcome their reluctance to hire.
The BCC said it wanted to see the Chancellor extend employment law reforms introduced towards the end of 2011
“Although doubling the unfair dismissal qualifying period to two years will boost business confidence to hire, more changes are needed to create a hard-hitting and comprehensive deregulatory package,”
said BCC director general John Longworth.
“This includes reforming redundancy rules, introducing no-fault dismissal and tribunal fees and sufficient action to implement promised health and safety changes.”
Youth unemployment is a particular concern for business groups, and the Confederation of British Industry has argued that the Youth Contract — to be introduced in April — should be extended to 16- and 17-year-olds. The BCC has also said the National Minimum Wage should be frozen to encourage businesses to take on more young people.
Access to public sector contracts
Better access to public sector contracts would stimulate activity in the small business sector, according to the FSB. The business group has urged the Chancellor to make it easier for small firms to bid directly for contracts rather than rely on subcontracting arrangements with larger businesses. Despite some reform, the Government is still well short of its target of awarding 25% of contracts to small businesses.
“They’re still quite large contracts and small businesses can’t necessarily take on the whole thing,”
an FSB spokeswoman said.
“They find themselves in a Catch-22 where they need finance to take on the project, but can’t get the finance without guarantees. We’d like to see contracts broken down more to make them more accessible.”