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28 June 2006

SMALL BUSINESSES URGE CHANCELLOR TO KICK-START A RENEWED GOVERNMENT EFFORT TO COMBAT RED TAPE

Reference number: PPO 28/6

SMALL BUSINESSES URGE CHANCELLOR TO KICK-START A RENEWED GOVERNMENT EFFORT TO COMBAT RED TAPE

Small business leaders are urging the Chancellor of the Exchequer to kick-start a renewed government effort to combat red tape.

The Federation of Small Businesses are calling for the responsibility for paying state benefits and collecting loan repayments to be returned to the experts in government agencies, such as the Inland Revenue.

They also said that if the Government wanted to encourage enterprise, it needed to give small firms a fairer slice of public sector contracts.

FSB Welsh Policy Chair, Roland Sherwood, said: “There is a raft of things that the Chancellor of the Exchequer can do to help the small firms sector.

“For example, if the Government wants to encourage enterprise, it should give small firms a fair slice of public sector contracts and reduce red tape to create a better business environment.

“Businesses are missing out on billions of pounds of lucrative govern­ment contracts because they are required to jump through hoops and wade through masses of red tape just to be in the running.

“Govern­ment contracts should be advertised more widely, and businesses should be able to register their interest more easily and at any time.

“And on the subject of red tape, the growing administrative burden hampers the ability of businesses to create jobs. Therefore the Chancellor needs to kick-start a renewed government effort to combat red tape by returning responsibility for paying state benefits and collecting loan repayments to the experts in government agencies, such as the Inland Revenue.

“A typical self-employed person now pays up to 32 times more tax than their incorporated counterpart. No other tax system in the world favours one form of business structure over another, or penalises the smallest businesses in this way.

“On the subject of the informal economy, government initiatives to clamp down on businesses that operate ‘in the shadows’ have been too scattergun to be effective. Measures to combat the informal economy have to be radical in order to succeed.

“We want to see a three-month amnesty to bring all employers into the PAYE scheme, reform to the VAT system to allow free movement of goods and services between registered traders, and a substantial increase in personal allowances to remove low earners from income tax altogether.

“Finally, on the subject of access for disabled people, small firms are sensitive to the needs of their disabled customers but are worried about the costs of ensuring effective disabled access,” he said.

The FSB said that the reality was that effective disabled access had significant cost implications for small businesses. They called on the Chancellor to introduce a 100 per cent First Year Allowance to ensure that all business premises comply with the requirements of the Disability Discrimination Act.

FSB spokesman Russell Lawson said: “We are encouraged by the realisation that more than 50 per cent of red tape comes from the European Union, and urge the Government to bear down hard on the European Commission and to ensure that the small business view is taken into account at social dialogue level.

“A number of these measures are already known to us and we would urge the Chancellor to introduce symmetry into the debate by coupling economic stability with regulatory stability as small firms are hardest hit by the cumulative impact of regulations.

“In particular, we would like to learn more about closing loopholes and tax paid by owner­ managed small businesses; R&D extensions, and if they will be available to the self-employed and entrepreneurs; how the improved flat rate VAT scheme will work in practice; and relief for subscription to professional bodies, and whether this includes representative bodies,” he said.