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South: FSB reports final pre-election budget calls from small businesses

12 March 2015
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According to the Federation of Small Businesses (FSB), tax simplification, reform of business rates, improved broadband services and continued fiscal discipline are needed to build on high levels of confidence among small businesses.

In its final pre-election Budget submission to government, the FSB has called on the chancellor to focus on delivering further supply side reforms, building on initiatives already underway.

The latest FSB Index report found the balance of businesses increasing their headcounts has risen by 2% this quarter compared to the same period last year. Many businesses are also finally able to reward staff with improved pay packets, which the results suggest have been supported by rising productivity growth.

To maintain this positive trend and support business confidence, the chancellor should concentrate on building on existing initiatives rather than invent new ones, particularly through taking forward tax simplification measures and committing to fundamental reform of business rates.

The FSB has also called for sustained commitment to rebalancing the UK economy with improved broadband delivery and increased transparency and accountability for LEPs, as well as prioritising the opening up of government procurement by fast-tracking the delivery of the Lord Young reforms so that businesses see the benefits.

David Hawes, Thames Valley regional chairman for the FSB, said: “The improving outlook for the UK economy is starting to be felt beyond the boardroom with low unemployment, increasing wages and buoyant business confidence among our members.  In many areas, the foundations are in place.  What we now need is to allow the reforms that have been made to bed in, and finish the roll out of those recommendations and reforms still needing to be put into action.

“The chancellor should avoid the temptation for a pre-election give away and focus on maintaining fiscal discipline, and delivering supply side reform that will boost long-term growth. This will help to maintain already high business confidence, and support the growth ambitions we are seeing among our members.”

Simplifying tax
The administrative costs in meeting tax obligations for small businesses are unnecessarily high and with new IT coming on stream, could be streamlined. We support the recommendations of Office for Tax Simplification (OTS) which ask for a single tax account for small businesses, with the ability to pay on a monthly basis.  Policy measures recently suggested by the OTS should be looked at too, with the Budget the ideal opportunity to set out a direction of travel to simplifying this area.

Reforming business rates
The Government has recognised the need for urgent reform of the failed business rate system and this Budget is an opportunity to publish the details of the Structural Review announced at Autumn Statement. The terms of reference must be of sufficient breadth to drive the fundamental review as promised in 2014. This will allow a review which can finally address the plethora of issues and injustices which make this such a ripe opportunity for meaningful reform.

Improving public procurement
The Government has made progress around opening up public procurement opportunities to small businesses.  However it is clear that much still needs to be done to complete a cultural change within the public sector.  We therefore urge the Government to prioritise the implementation of reforms set out by Lord Young, backed up by further measures to increase transparency and accountability for delivery across the public sector.

Broadband
This budget should aim to continue the work to rebalance the economy and stimulate growth outside London and the South East by creating faster, more modern digital infrastructure. 94% of small business owners consider a reliable Internet connection critical to the success of their business. Access to broadband services is now the ‘Fourth Utility’ and the Government’s ambition for future broadband should match this reality. The FSB is calling on government to commit to delivering a minimum 'service level floor' of 10 Mbps to all premises in the UK by 2018-19, rising to 100 Mbps for all premises by 2030.

Exports
Export finance has continued to be an issue for businesses looking to sell overseas, and despite attempts by UK Export Finance (UKEF) to make their range of products and support more appropriate for smaller firms, it is not clear that this has yet been successful in driving significant new finance for small businesses. Given the British Business Bank’s (BBB) role in supporting small business finance and their understanding of the sector, a bold step would be to see how the BBB could be given a greater role in delivering export finance which is accessible for small firms.

Supporting young people
The FSB believes strongly that investment in quality apprenticeships will lead to increased productivity gains for businesses and the wider economy. We are eager to see reform of the apprenticeship system completed as soon as possible, with a structure in place that attracts small businesses as much as medium and large businesses to take on apprenticeships. Last year the Chancellor announced a £20 million investment in careers advice for young people. The FSB would like to see further clarity on what the remaining unallocated funds will be spent on and how it can be used to support young people to become apprentices.

Universities
Universities have a leading role to play in stimulating regional economies, and encouraging rebalancing through knowledge transfer to local businesses. This is why we continue to advocate increasing the Higher Education Innovation Funding (HEIF) by £90 million.  This was recommended by the Witty Review as a central plank towards supporting and developing greater interactions between universities, colleges and the wider business community.


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