Tax simplification, reform of business rates, improved broadband services and continued fiscal discipline are needed to build on high levels of confidence amongst small businesses
In its final pre-election Budget submission to government, the Federation of Small Businesses (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 with the same period last year. Many businesses were also finally able to reward staff with improved pay packets, which the results suggested have been supported by rising productivity growth.
To maintain this positive trend and support business confidence, the Chancellor was urged by the FSB to 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.
TRANSPARENCY AND ACCOUNTABILITY
The FSB has also called for sustained commitment to rebalance the UK economy with improved broadband delivery and increased transparency and accountability for local enterprise partnerships (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.
“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,” explained John Allan, National Chairman, FSB. “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 introduction of those recommendations and reforms still needing to be put into action.
Mr Allan warned George Osborne that he should avoid the “temptation for a pre-election giveaway” and focus on maintaining fiscal discipline, and delivering supply side reform that will boost long-term growth.
“The administrative costs in meeting tax obligations for small businesses are unnecessarily high and with new IT coming on stream, could be streamlined.” Said Mr Allan. “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.”
Another area Mr Allan mentioned was 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 had to be of sufficient breadth to drive the fundamental review as promised in 2014. This would allow a review which could “finally address the plethora of issues and injustices which make this such a ripe opportunity for meaningful reform,” concluded Mr Allan.
Caption John Allan, National Chairman, FSB – “In many areas, the foundations are in place. What we now need is to allow the reforms that have been made to bed in….”