Member Article

Politicians need bigger promises for the UK’s SME industry

Last week saw the end of the Conservative Party Conference and with it, the closure of the 2013 party conference season.

Although each conference focused heavily on engaging with and supporting the UK’s small business economy, in our opinion they did not go far enough.

At Simply Business we have witnessed first-hand the key issues facing small businesses, talking and working with owners every day. It is vital that support for small businesses forms the bedrock of any Government policy, both now and following the general election in 2015, as it is absolutely fundamental to any attempts to revive the UK economy.

With this in mind, we have identified five key areas in which the government needs to take action. Small businesses are the backbone of the UK economy, and they will lead the country’s recovery - but they can only do it with the government’s support.

1. Target tax cuts at small businesses

Ed Miliband is right to cut business rates, but his announcement does not go far enough. Large firms must learn to pay their way, and this means shouldering more of the tax burden – but the gap between the small profits rate and the main rate of corporation tax has narrowed. The government should cut the small profits rate to generate some breathing space for the smallest businesses, paying for this by closing the loopholes that allow big companies to dodge tax.

2. Recognise micro-businesses

Simply Business deals with micro-businesses (those with 0 to 9 employees) every day. They are an increasingly vital part of the UK economy, accounting for 20% of private sector turnover, but there must be recognition that their needs and requirements are different to those of other SMEs. Building on the Young Report, which highlighted the growing importance of micro-businesses, the government should convene a new inquiry to propose tailored support for these unique ventures.

3. Restore the National Insurance holiday

The National Insurance holiday cut small businesses’ NI bills by up to £5,000 for their first ten employees – but the scheme was scrapped in September. The coalition’s Employment Allowance was welcome, but it does not go far enough. A further reduction in the cost of hiring could still be a vital way to combat unemployment and help businesses grow. We want to see an extension of the National Insurance holiday – a step more generous than the Employment Allowance - to enable small businesses to take on their first members of staff.

4. Ease credit availability

Availability of credit remains the primary concern facing many small businesses. The banks claim that lending is down because appetite is depressed, but small firms are being dissuaded from applying because of a presumption they will be rejected. Funding For Lending, the government’s flagship scheme, has fallen - net lending fell in the six months to March, and has picked up by only a fraction of the total amount drawn down on the scheme. We want to see a cross-party initiative to replace Funding For Lending, putting small businesses at the heart of efforts to ease credit.

5. Reduce the red tape burden

The government announced with much fanfare the introduction of new rules reducing the accounting burden on small businesses – but they were forced to do this in order to comply with an EU directive. Regulatory burden is constantly ranked amongst the most worrying issues for small firms. Entrepreneurs should be to concentrate on running their business, rather than complying with red tape requirements, and to that end the government should consider new ways to reduce the regulatory burden.

To share your thoughts, please engage the conversation with @simplybusiness.

This was posted in Bdaily's Members' News section by Jason Stockwood .