Crystal Umbrella

The British Chamber of Commerce has released the results of its Q4 2009 Economic Survey which shows that while improvements are continuing, growth was slower than in the third quarter of 2009. The evidence gathered would suggest that the country is starting to come out of recession but it is still a slow process.

BCC Director General, David Frost, stated: “Although these results are not as impressive as hoped, they do contain some positive features – most notably strong improvements in employment and exports within the manufacturing sector. Businesses are showing resilience despite difficult and uncertain trading conditions. Confidence is improving, and the boost in exports must be nurtured in order to strengthen Britain’s trade position globally, and to help rebalance the economy away from an over-reliance on the public sector.

He continued: “It is vital that the government now demonstrates a determination to support wealth-creating companies in 2010. Additional business taxes must be avoided, and the 1% increase to employers’ National Insurance Contributions planned for 2011 should be scrapped. Unless the private sector is given the freedom to create jobs and wealth, the UK’s economic recovery will be slower than it should be, and we will face the serious risk of a double-dip recession.”

The BCC’s Chief Economist, David Kern, warned that this recovery will only happen if the government helps out and “strengthen Britain’s AAA credit rating by urgently producing a more credible medium-term plan for cutting the country’s huge budget deficit, and restraining public spending.”

The Forum of Private Businesses (FPB) is lobbying the government to include specified tax cuts within their pre-budget report on 9^th December. The FPB have recently surveyed all of their members and more than twenty per cent believe that the government should be focussing policies to relieve tax burdens on SMEs.

A number of changes have been suggested by FPB in their proposals to government. These include the creation of a national insurance holiday for businesses with less than ten employees alongside a delay in the implementation of the planned 0.5% NIC rise. They would also like to see corporation tax cut to 20%. They see this as a small concession by the government which could really benefit businesses.

VAT is another major taxation issue and the FPB would like the return of the 17.5% rate should be postponed to a more reasonable timescale. They also believe that VAT should be reduced permanently within labour-intensive sectors to just 5%.

Finally, they are asking that all small businesses are automatically enrolled for the Small Business Rate Relief as figures show that less than half of the businesses who qualify for this relief have actually applied for it.

Phil Orford, FPB’s Chief Executive, said: “There is still a long and difficult road ahead of us, but small businesses are key drivers of the economy and the Government must create a tax environment in which they can thrive. That means tax relief in specific areas that would help to foster cash flow, innovation and employment opportunities so that small businesses are able to seize the opportunities that will emerge as the economy emerges from recession.”

The shadow work and pensions minister, Mark Harper, has questioned how much the government’s Business Link service has spent on support for start-up businesses and contractors. Harper was asking how much of the £207 million Business Link budget was ringfenced for one-person ventures or new companies. He put this to Lord Mandelson’s business department, requesting figures for the past twelve months. However Pat McFadden, Lord Mandelson’s deputy, has refused to provide the requested information. He stated that the department would incur a prohibitive cost for gathering this data.

In response to Mr Harper’s question, Mr McFadden stated: “The department provides regional development agencies with funding in a single pot for the delivery of services. The RDAs contract with regional suppliers to deliver Business Link. The question requires gathering data from the nine regions and the multiple suppliers they contract with to deliver start up services locally and could be obtained only at disproportionate cost.”

Business Link are now providing courses where people can gain knowledge about how to run their own business. However, these courses are only accessible by people who have been claiming jobseeker’s allowance for a period of six months or more. The government have also recently conceded that some people on shorter term unemployment may also be eligible to attend some of the self-employment training courses. These concessions relate to specific groups including people with a history of homelessness and other disadvantaged members of the community.