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News Release from: The Forum of Private Business
Edited by the Manufacturingtalk Editorial
Team on 23 November 2006
SME's 'wish list' published for UK
Chancellor
UK Chancellor: please lighten the tax and red tape burden, slow the increase in the National Minimum Wage, and give a percentage of government contracts to small firms.
The Forum of Private Business (FPB) has published a 'wish list' for smaller businesses, ahead of the UK Government Chancellor's pre-Budget speech Gordon Brown will deliver what is widely expected to be his final pre-Budget speech to Parliament on Wednesday, 6 December 2006
This article was originally published on Manufacturingtalk on 13 Sep 2005 at 8.00am (UK)
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The FPB, which represents around 25,000 small and medium-sized firms in the UK, wants a number of areas to be addressed by the Chancellor.
They include: lightening the tax and red tape burden, slowing the increase in the National Minimum Wage, giving a percentage of government contracts to small firms and a shift of emphasis in education to reflect the needs of smaller businesses.
The FPB's chief executive, Nick Goulding, said the wish list would promote productivity, competitiveness and employment for the UK economy: "It's clear that Mr Brown has work to do to win round owners of smaller businesses who are frustrated at having their profitability and growth restricted by a government that does not listen to them." * Ease the tax burden - on tax, the FPB wants the return of the nil rate starting band on Corporation Tax for the first GBP 10,000 of profits.
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Goulding said its removal has left small firms with a bigger tax headache.
"Thousands of micro businesses now face an extra bill of up to GBP 1,900 a year because of the change announced in the last pre-Budget speech.
Bringing it back would encourage thousands of sole traders and partnerships to set up limited companies, as it did in 2002 when it was introduced.
Many of those firms now find themselves unable to revert to their prior business status without being subject to capital gains tax." The FPB is even giving the Chancellor advice on where he could increase revenue for Government coffers.
By closing the loophole created by Low Value Consignment Relief (LVCR) on some goods imported from the Channel Islands, an extra GBP 80 million would have been generated in the last year in VAT from firms now exploiting the system.
Major names such as HMV have relocated some operations to the Channel Islands, in order to sell goods to the UK without the imposition of VAT.
LVCR was designed to cut the cost of importing individual goods, worth GBP 18 or less, by exempting them from VAT.
However many large retailers have taken advantage of this by moving to the Channel Islands, exporting goods (such as CDs and DVDs) manufactured in the UK, selling them online and then re-importing them into the UK without VAT.
High street retailers and those who can't afford to relocate to the Channel Islands can't compete and are being 'driven to the wall'.
The FPB also believes the Chancellor must simplify the VAT registration process and integrate National Insurance (NI) with income tax for schedule E taxpayers.
Goulding said simplification would free the hands of smaller firms.
"The FPB is pushing for the Chancellor to simplify and lessen administrative burdens, especially in the VAT registration process.
Integration of Class 1 NI with income tax for schedule E taxpayers, with an appropriate proportion of the tax being designated as NI and income tax, would significantly reduce administrative complexity while maintaining the integrity of the NI fund." * Rethink the National Minimum Wage - the National Minimum Wage (NMW) is an increasing burden on smaller firms, discouraging them from taking on new employees.
The latest rise in October 2006 from GBP 5.05 to GBP 5.35 has added to the pressure.
Goulding wants to see the NMW linked to the Retail Price Index (RPI).
"The increases have been well above earnings growth, and periods between increases are too short.
The level and rate of change in the NMW is hampering competitiveness and job creation amongst smaller firms." * Open up government contracts for smaller firms - the FPB is also demanding that the Government open up its contracts to smaller firms.
Public procurement remains an 'exclusive club' for bigger firms to enjoy and their smaller counterparts to be excluded from.
Goulding said that is for several reasons: "Smaller businesses are shut out of the public procurement market by Government departments' excessive bureaucracy, tendency to favour established suppliers with large reputations, and irrational risk-aversity." In order to combat the problem, the FPB wants a percentage of Government contracts set aside for smaller businesses.
This would not give smaller businesses an unfair advantage, rather it would force Government departments to make their bidding process more open and accessible to smaller businesses, and therefore open up greater competition for public contracts.
This would save taxpayers' money as well as correcting the existing market failure and giving smaller businesses their fair share.
* Help educate employers and involve them in teaching others - on education, the FPB wants the needs of smaller firms put at the heart of the proposals within the Education Bill.
A tax credit should be introduced to enable those employees who are not professionally qualified to continue with professional development.
Goulding wants a more demand-led Sector Skills structure.
"Smaller businesses must be given a voice in devising skills initiatives.
"Skills Sector Councils must respond to the market demand and are supposed to be employer-led, delivering skills initiatives that businesses need, however so far they have been off-target in delivering this for smaller firms." * About The Forum of Private Business - The Forum of Private Business (FPB) was formed in 1977 and is a pressure group fighting on behalf of private businesses.
The FPB represents approximately 25,000 UK-based businesses, which employ in excess of 600,000 people, and is a powerful lobbying voice in both the UK and the European Union.
The FPB, as the only full UK member of UEAPME - the organisation that represents small and medium-sized enterprises (SMEs) in Europe - is the most prominent advocate of UK SMEs in Brussels and has a track record of positively affecting legislation prior to its introduction in the UK.
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