Brown’s last Budget must be his best, says business
Date: Wednesday, February 28, 2007 Ref: PR 2007 15
FSB News Release
PR/2007/15
Issue date: Wednesday 28 February 2007
Brown’s last Budget must be his best, says business
The Federation of Small Businesses (FSB) presented its Budget submission to the Treasury today on behalf of its 200,000 members, seeking to better inform the Chancellor on how he can continue economic growth through effective assistance to small employers and the self-employed.
The FSB noted in particular that twenty five per cent of FSB members encounter problems with new recruits lacking basic literacy and numeracy skills. These skills are the foundation on which the success of the UK economy is built. Without them businesses struggle to recruit and grow and young people cannot achieve their ambitions. The FSB believes that this failure in the school system should be an urgent priority for the Chancellor. The education system should provide people with the necessary basic skills – this should not be the role of the employer.
In spite of the growth of the small business sector an increasing number of businesses are choosing not to employ staff. This is because onerous employment legislation is putting businesses off employing people. Thirty five per cent of FSB members have chosen not to employ anyone, citing employees as ‘too much of a risk’. Given that fifty eight per cent of the private sector workforce (twelve million people) are employed in small businesses, the potential impact on the economy if this slowdown were to continue is clear. The employment law burden must be reduced considerably on small businesses.
Carol Undy, FSB National Chairman, said:
“It is widely anticipated that this will be Gordon Brown’s last Budget. The FSB believes that it must also be his best Budget.
“Despite ten years in Number 11 there is still a lot that remains to be done in the fields of tax, business support and regulation. This final Budget for the Chancellor is an ideal opportunity for him to make a huge difference to the health of the economy by helping small businesses. The majority of private sector jobs are in small businesses and they are waiting for action from the Chancellor following his frequent warm words about entrepreneurship.
“Reductions in tax and regulation for small businesses as well as more effective investment in priority areas, such as basic education, transport infrastructure and business support would boost the economy. That growth would benefit the whole country. We look forward to the Chancellor delivering this on Budget day.”
The FSB’s Budget submission calls for:
• An assurance that all school-leavers will have basic literacy, numeracy, communications and personal presentation skills;
• A recognition for informal training on the job in the workplace and more bite-sized vocational courses that small firms can access for their staff;
• Entrepreneurship to be encouraged at school;
• Taxes that are low, simple and stable – changing tax rates and altering their nature hits business confidence and planning – National Insurance in particular should be simplified;
• A greater knowledge and understanding of small businesses in Government Departments;
• A greater allocation of funding to road and rail infrastructure;
• A more flexible approach to labour law so that the variance in needs between small and large businesses is recognised – compliance costs are much higher for small businesses;
• The Government to stop using employers to administer benefits via the payroll.
• The promotion of the work-life balance by the Government must not forget to include the work side of the issue – FSB members feel that there must be a balance between employer and employee rights;
• A tightening up of Regulatory Impact Assessments to reduce the red tape burden on businesses;
• The National Minimum Wage to rise only by inflation in future to avoid hitting businesses hard in some regions and sectors;
• The end of IR35 – it is an administrative burden for businesses and HMRC and brings in little revenue;
• Tax reforms on climate change to be revenue-neutral;
• More effort to ensure a secure and sustainable supply of energy with recognition that small businesses need to be recognised as a separate consumer group in the energy market;
• Local authorities to engage with their business communities and procure from them where possible – the trend for public sector contracts being aggregated unfairly cuts small businesses out of the process and can work against best value for public spending; and
• The continuation of the welcome initiative to streamline business support schemes.