Crystal Umbrella

Skilled PAYE umbrella contractors may find themselves being mopped up by the UK’s small start-up businesses, more than a quarter of which are struggling to recruit suitably skilled employees.

New figures from the Federation of Small Businesses (FSB) suggest that despite a pool of 2.62 million unemployed people, small firms at start up can’t find enough appropriately skilled staff to fulfil vital roles. An immediate solution, of course, is to recruit professional contractors working through umbrella companies to plug the skills gaps, but the FSB believes that, in the longer term, the government needs to do more to address the problem.

Launching an investigation into the issue with the All Party Parliamentary Small Businesses Group (APPSBG), the FSB is calling on the coalition to prioritise ‘enterprise education’ and reinstate the graduate internship scheme as matter of urgency. Moreover, with 95% of small businesses employing less that 20 people, cutting back on administrative and financial barriers to employment is a key priority, the FSB believes.

FSB Chairman John Walker said “With the private sector being relied on to drive economic recovery… budding entrepreneurs should be supported in setting-up in business, and existing businesses should be encouraged to innovate, take on staff and grow.”

The Chair of the APPSBG said that the skills minister, John Hayes, was already working diligently to close the skills gap, but his work was “being hampered by the poor performance in our primary and secondary schools, especially with regard to literacy and numeracy, and whilst Michael Gove, the education secretary, is pulling out all the stops, there is still a lot to do.”

The Federation of Small Businesses have stated their position on the automatic pensions enrolment scheme which is due to commence in 2012. They believe that micro businesses should be exempt from this scheme as it would be a financial and administrative burden for firms with less than 10 employees.

FSB Policy Chairman, Mike Cherry, stated: “The FSB welcomes initiatives to help people save for their future in a pension but we are still concerned the new automatic enrolment pension scheme is going to be an administrative headache for small firms – particularly micro firms – and will cost them in time and money.”

The FSB also believe there are issues regarding the expertise that is required to select a pension and put the proposed changes in place for employees. They have researched this issue and 70% of small business owners said they did not feel confident choosing their employees’ pension.

They have proposed, instead, a default scheme which employees without other savings or pension provision would be enrolled into. They believe such a scheme should be collected through PAYE or similar and the money invested in low risk funds.

He continued: “We know that small firms do not feel confident in choosing a pension scheme because of its complicated nature and we are thoroughly disappointed that five years on from the original proposals, the pensions industry has yet to come up with an efficient system to cater for micro firms. The FSB is calling on the Government to make micro firms exempt from the automatic enrolment scheme and improve proposals for small firms.”

A petition has been put together by the Federation of Small Businesses (FSB) alongside other recruiters and businesses to request the government to freeze national insurance. The FSB has conducted research which proves that is employers’ national insurance increases by the proposed one per cent, it will result in 57,000 job losses. The increase is also unlikely to reduce the public spending debt. The petition, which can be found at www.no-nics-rise.co.uk, is seeking to reverse the planned rise in contributions. The FSB believe that small businesses taxes should only ever be used as a last resort as small businesses play a vital role in the UK economy.

John Wright, National Chairman, Federation of Small Businesses, said: “This petition – calling for no rise in National Insurance Contributions – will tell Government that real action needs to be taken to really help tackle unemployment. The rise in National Insurance is a tax on jobs and will cost the country in thousands of jobs, as well as prevent small firms from taking on more members of staff at this crucial time in the country’s economic recovery.

“The FSB has been calling on the Government to take steps to make it easier for the country’s 4.8 million small firms to employ staff. The FSB knows that small firms want to recruit over the coming year, but are put off by taxes. The Government can give the economy a real helping hand by freezing National Insurance and helping to encourage small firms to grow and take on additional employees.”

Just this week the Conservative Party set out their plans for a fairer taxation system if they were to win this year’s general election. Now, the Federation of Small Business (FSB) is requesting all of the main political parties to make clear their plans for small firms before the General Election takes place.

The FSB is due to have its annual conference in March this year. They have lined up speakers from all of the major political parties to speak at the event in Aberdeen. Speaking at the conference will be Tory Leader David Cameron, Nick Clegg, Leader of the Liberal Democrats and Business Secretary Lord Mandelson. Since the General Election is likely to take place shortly after this even, it will be interesting to hear the plans that each party puts forward.

In a FSB press release, National Chairman, John Wright, said: “The FSB’s Annual Conference is set to give small businesses the information they need to survive the year ahead as the country gets ready to go to the polls, and we look to an incoming Government to continue to move us forward on the road to recovery. The event will give small businesses the chance to hear exactly what politicians will do for them before the General Election.”

He concluded: “Small businesses truly are the lifeblood of the economy and are doing all they can to ensure the country fully recovers from the recession this year. The FSB Annual Conference 2010 in Aberdeen will give small firms the chance to debate the issues that really matter to them.”