Over the past year, small businesses have been struggling with inflation and VAT rises, so it was hoped that there would be good news for small businesses in this year’s budget.
The Federation of Small Businesses (FSB)’s pre-Budget wish list included scrapping the planned fuel duty, extending the national insurance holiday and a freeze on employment law.
While not all of its wishes have been granted, the FSB has welcomed several announcements in the Budget that it believes will give stability and help support small businesses.
A boost to businesses
The FSB believes small businesses are key to innovation and several other features of the Chancellor’s Budget look likely to provide a much-needed boost to small entrepreneurial enterprises. These include:
- The extension of the Enterprise Investment Scheme
- The doubling of Entrepreneurs Relief to £10 million
- The re-introduction of Enterprise Zones across the UK and the creation of 21 new zones
- A 200 per cent increase in SME R&D
- An extension to Small Business Rate Relief for properties with a rateable value below £6,000
- 50,000 apprenticeships.
John Walker, National Chairman of the FSB, said: “We are pleased that the Chancellor has introduced a fuel duty stabiliser, has committed to cutting fuel duty and has introduced 21 new Enterprise Zones. This will provide much needed stability for struggling small businesses.”
Budget decisions to reduce and stabilise fuel duty appear to have been particularly welcomed by the FSB and are sure to delight the 70%of respondents to an FSB survey who said that their car or van is crucial to their day-to-day operations.
The unpredictable nature of fuel prices has been shown to damage growth for businesses across the UK, with a recent FSB survey revealing that 62% of businesses are increasing prices, one in 10 laying off staff, a quarter freezing wages and 36% reducing investment.
New employment laws
The FSB has welcomed a three-year hold off on new regulations for micro-firms which has prevented businesses from taking on more staff. They believe this moratorium will give the smallest firms the confidence to employ more staff without having to worry about constant changes in employment law.
In order to really open up an environment for businesses to take on more staff, the FSB would like this to be extended to all small firms, and there are concerns that new employment laws being brought in this year.
“The Government has committed to cutting red tape but we believe new employment laws will still come into force in this year, which could hinder businesses from taking on staff,” said Walker.
Moves to reduce the main rate of Corporation Tax over the next three years have also been welcomed but the FSB is disappointed that there was no mention of how the small business rate of 21 per cent would be affected.
A missed opportunity
Though the FSB’s response to the Budget has been largely positive, it’s disappointed that the Government hasn’t extended its National Insurance Contributions (NICs) holiday to existing businesses. With unemployment at 2.5 million, the FSB sees this as a missed opportunity and believes such a policy would have been cheaper to implement than keeping people on benefits.
“Extending the NICs holiday nationwide to existing businesses would really have provided incentives for small firms to take on more staff,” said Walker.