Spending review: small firms say growth programme is ‘missing link’

Oct 22, 2010


The Federation of Small Businesses has welcomed measures to increase the number of adult apprenticeships by 50% to 75,000 new apprentices a year.
It also backs measures moving towards a low carbon economy and the commitment to improve the infrastructure of the country.
The £530 million directed from the government and the BBC to put in place superfast broadband pilots is something small businesses had been calling for.
The FSB also supports investment plans for the Post Office network.
However, small firms fear that the missing link in the government’s deficit programme is the need to create growth – increasing the tax base, creating more businesses and incentivising small firms to grow and innovate.
FSB calls for a Programme for Growth follows research which shows that 10.4% of firms expect to decrease employment over the next three months as business confidence in future prospects and revenue growth weakened over the July to September period.
It wants:
  • An extension to the National Insurance Contributions holiday to include existing firms with up to four members of staff and provide incentives when they take on three new employees, funded by scrapping the £1 billion Regional Growth Fund;
  • A cut in VAT to 5% in the construction sector to help create jobs and stimulate the economy, but also increase revenue to the Treasury;
  • A cut in the business support budget to £500 million and concentrate spending on genuine business support for micro businesses and a fully operational web portal;
  • A business-led National Mentoring Service to be created through the Institute of Enterprise and Entrepreneurs to match mentors with businesses with backing from the banking industry.
Allan Banks (pictured), chair of the FSB North Bucks branch, said: “We all know we are living in an age of austerity and that these cuts will affect us all. But our members understand that to reduce the public sector deficit, these cuts had to be made.
“The small business community continues to have a vital part to play in driving a credible recovery and taking on new members of staff to help tackle unemployment particularly here in Buckinghamshire where small businesses form such a large part of our economy. 
“It is now vital the government puts a Small Business Programme for Growth into action immediately.”
Luton and South Bedfordshire branch chair Carole Hegley added: "As our research shows, small firms are at tipping point and lack the confidence to take on the 500,000 people that will be made redundant as a result of these cuts.
“It is up to the government to incentivise the small business community to promote growth and help small firms take on new staff.”
Regional national councillor Michael Mealing said the South East contained high concentrations of public sector employment and many small businesses based there provided services to local and central government.
He said: "Our region is part of one of the more prosperous areas of England. As such we are better placed than many other parts but are expected to lead economic recovery, currently without getting some of the help available elsewhere."
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