News

March 11, 2011

Budget plan puts too much pressure on small firms, warn business groups

It is unrealistic to expect small firms to lead the economic recovery on their own, the Federation of Small Business (FSB) has warned, after the Prime Minister said that “the only strategy” for growth was to get behind small businesses, writes Clare Bullock.

Speaking at the spring Conservative Party conference, David Cameron said that the Budget on 23 March would be the most “pro-growth this country has seen for a generation” and would “take on the enemies of enterprise”.

However, the FSB has warned that small firms will not be able to lead the UK’s economic recovery without strong Government support.

“There is a lot of expectation and pressure being put on small firms,” said FSB spokeswoman, Prue Watson. “They are willing to do it, but it’s up to the Government to create a growth strategy in the Budget that will allow them to.”

The Budget initiatives outlined by Cameron included cutting “the ridiculous rules and regulations that make life impossible for small firms”.

Watson said that the Government had made pledges to cut red tape – such as the “one-in-one-out” policy – before but hadn’t delivered. “We haven’t really seen that put into full force as yet,” she said.

Other Budget plans detailed by the Prime Minister included increasing access to public sector contracts for small firms and launching a new enterprise allowance offering £2,000 of start-up support to unemployed people with a sound business plan.

Managing director of small business Cheap Accounting, Elaine Clark, said: “Cameron needs to put his money where his mouth is and simplify the administration that small businesses have to undertake.

“The taxation burden on small business is huge – they’ve just put up National Insurance rates for example,” she added. “If they really want to encourage small businesses then offer tax breaks.”

Clark was also sceptical that Cameron’s plans seemed to focus just on high-growth firms and ignored sole traders with less ambitious expansion plans.

“How many new businesses will grow to a substantial size?” she said. “Many people have set up a business as their route out of redundancy and this type of enterprise needs to be encouraged, but I don’t think that’s what Cameron has on his radar.”

• Chancellor calls on small firms to submit Budget ideas