News

January 29, 2010

National Insurance and VAT freeze must be election priorities, says FSB

Freezing National Insurance Contributions (NICs) and suspending VAT increases must be priorities for the next Government to help small firms out of the recession, the Federation of Small Businesses (FSB) has said.

Launching its 2010 manifesto to coincide with the run-up to the general election, the FSB has made several recommendations which it says will help small firms create jobs, get access to finance, innovate and set up new businesses.

One of the key proposals is a shake-up of the current payroll tax regime, including a freeze on NICs and a rebate for firms taking on new staff over the next two years.

“Two critical areas for small firms are job creation and broadening access to finance,” said an FSB spokesperson. “Small businesses hold the key to tackling the unemployment crisis, but NICs effectively act as a tax on jobs. There needs to be more support from the next Government to encourage businesses to grow.”

The FSB also called for improved access to finance by opening up other sources of funding, such as introducing council-run banks. “A worrying number of our members are still being refused funding,” said the spokesperson. “We’d like to see much more competition among the banking sector.”

Responding to the proposals, a Department for Business, Innovation and Skills (BIS) spokesman said that the Government was determined to support the small business sector, and recognised its role in economic recovery.

“That is why we have extended the Enterprise Finance Guarantee for a further 12 months to encourage additional bank lending to viable small businesses, and announced that businesses will be able to continue to defer tax payments to help with cashflow,” he said.

“We are also working closely with the FSB to increase internships in small businesses for 10,000 graduates, and to tailor Jobcentre Plus services more closely to small firms’ needs,” added the spokesman.