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This comes as a new Office for National Statistics (ONS) survey of more than 7,000 businesses shows fear of that imminent collapse is widespread.
FSB National Chair Martin McTague is urging the Chancellor to make next week’s Spring Statement 'a rallying point' for businesses as surging operating costs, supply chain disruption and labour shortages make it increasingly difficult for firms to invest and expand.
In a letter to Rishi Sunak, Mr McTague recommends interventions aimed at addressing 'foundational issues' in the UK economy against a backdrop of declining business confidence.
The move follows a pledge from the Chancellor last month to create 'a new culture of enterprise'. In his Mais lecture, Sunak stated that he 'firmly believes in lower taxes', adding that 'the marginal pound our country produces is far better spent by individuals and businesses than Government'.
Increae
The Chancellor is set to confirm an £18bn collective annual increase in National Insurance Contributions (NICs) and dividend taxation at his Spring Statement on March 23, 2022. There is also speculation that the Treasury may scrap the R&D tax credit incentive for small research-intensive businesses in favour of supporting larger companies.
In his correspondence with the Chancellor, McTague flags that, with the public finances tight, the Treasury should move away from an 'eye-wateringly expensive' super deduction tax break which 'will primarily be used by corporations and multinationals, not small businesses operating in all our communities,' and instead prioritise reduction of Government-imposed overheads to free up funds for investment at the local level.
FSB research shows that just four per cent of the small businesses that make up 99 per cent of the private sector see the super deduction as one of the top three incentives to invest.
In its costed Spring Statement submission, FSB recommends:
- Increasing the Employment Allowance to £5,000.
- Taking an additional 200,000 community small businesses in levelling up target areas out of the business rates system by increasing the rateable value ceiling for small business rates relief to £25,000, and extending a one-year relief on business rates increases linked to property investments in plant and machinery.
- Extending support with energy costs being allocated via the council tax system to micro businesses via the business rates system, and launching a Help To Green initiative to spur on-site renewable generation.
- Delivering on pledges to end the UK’s poor payment culture by making Audit Committees directly responsible for ensuring best practice within supply chains.
- Expanding and making permanent a statutory sick pay rebate for small firms whilst continuing with incentives in England to take on apprentices and T Level placements.
- Widening eligibility for the Help To Grow Digital and Management initiatives to the 750,000 small firms currently excluded from them.
- Simplifying the R&D tax credit system to make it more accessible for small businesses without having to use paid intermediaries.
Confidence
FSB is also encouraging the Government to build on the success of the Refugee Entrepreneurship Pilot Programme. Existing research shows that migrants seeking asylum are considerably more likely to start an enterprise than other groups.
Elsewhere in its letter to the Chancellor, FSB advocates reform of Universal Credit to make it more supportive of entrepreneurs without start-up capital, not least in regards to the minimum income floor. The New Enterprise Allowance, which has helped to create more than 100,000 businesses, was withdrawn at the start of the year.
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A quarter of enterprises in the hard-hit accommodation and food services sector are still not fully trading, according to the ONS, and the majority of firms are concerned about performance over the coming month: 'the top two concerns were inflation of goods and services prices and energy prices.'
FSB National Chair Martin McTague said: “When we look back at this tumultuous period, next week’s Spring Statement will, for better or worse, be seen as a turning point.
“The Chancellor has a choice: plough on with damaging tax hikes, or take steps to protect the most fragile and empower small firms to deliver his ‘culture of enterprise’ vision.
“He rightly talks about the need to invest in capital, people and ideas. However, that investment cannot happen so long as surging operating costs are depleting cash reserves and disposable incomes. Pulling the rug from under small research-intensive firms with the removal of incentives would make a bad situation worse.
“The time to deliver a low tax, high investment, dynamic economy is now, not later in the political cycle. The Chancellor cannot control the wholesale price of gas and oil, but he can control tax policy.”
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Susie Hughes © Shout99 2022
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