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Business Europe invites the Forum of Private Business, an
organisation representing over 25,000 businesses in the UK, to comment on the
past year and its impact on small businesses. Once again we've had a year where little has changed for the small to
medium sized enterprises (SME) sector. Our members have maintained their
opinions on a range of subjects that concern them, which indicates that little
has been done to address the factors causing them difficulty. In the coming
year we hope that positive measures will be taken to help SMEs prosper and
grow. Although the Chancellor was far from radical in his recent pre-Budget
statement there were a few things to bring cheer to small businesses and of
course some that won't. His commitment to address the issue of 'red tape' will be welcomed by
our members. The issue has held a constant top five place in our members'
concerns for many years now. Those businesses that are constantly battling what
they see as a deluge of needless bureaucracy, much of which emanates from the
European Union, will be cheered by the Chancellor's assurances that 147
regulations will be scrapped. What concerns many of our members, however, is whether the
regulations to be scrapped will very quickly be replaced by 147 other
regulations. Everything from the new controls for asbestos in the workplace, to
changes in employment law will tax the business owner's ability to keep up to
date with the compliance regime that according to our research, may cost
business as much as £5.5 billion a year. Our research also indicates that excessive bureaucracy acts as a
deterrent to businesses seeking Government assistance. Positive moves to
promote entrepreneurship and innovation, such as Research and Development tax
credits, are not being taken up as readily as they might. This may be due to
the overly bureaucratic processes connected with applying for them. FPB are heartened by the news that the Chancellor intends to petition
the European Union to 'think small first' and take into account small firms
when implementing new legislation. Whether SMEs like it or not, Europe and more
importantly its legislators, have and will continue to have a profound impact
on forthcoming legislation. FPB is the only UK full member of UEAPME (the
European SME representative organisation) and therefore an active participant
in the Social Dialogue process that allows us to effectively fight the UK SMEs
corner. The ever-burgeoning skills gap also features prominently in our
member's concerns and the announcement that the Government has committed £190
million for skills training suggests that the calls of many SMEs for better
access to quality training are finally being heard. At FPB we believe that it is essential for the UK to have a highly
skilled adaptable workforce if we are to compete in an increasingly competitive
global marketplace and any initiative that helps to deliver a more responsive
and dynamic workforce is a step in the right direction. The introduction of the Working Time Directive is seen by many as a
prime example of the constrictions being placed on small businesses by
European-driven legislation. A strong economy needs flexible businesses. The
ability to alter shift patterns, often at short notice, due to demand is
crucial for wealth generation. Many businesses believe that such legislation
stifles their capacity to respond to fluctuating market conditions and in turn
stifles growth. FPB's Member Information Service has taken numerous calls from
businesses worried about the implications of the Directive. Compliant
businesses believe that they are placed at a competitive disadvantage when
their business rivals show a flagrant disregard for the regulations they are
following to the letter, which in turn makes the compliant business's attempts
at expansion even more difficult. During the next year FPB will continue to oppose moves to remove the
Working Time Directive opt-outs as we believe the current regulations give
adequate protection to employees and provide much needed flexibility to
SMEs. Closer to home there is still plenty that the Government could do to
improve the trading conditions of SMEs. The ever-increasing costs to small
business of Employers' Liability Compulsory Insurance (ELCI) is perhaps a
reflection of the world-wide increase in insurance costs post 9/11, yet the 5%
Insurance Premium Tax (IPT) that the government levies on top of the general
increases makes this particular bitter pill even harder to swallow. We have repeatedly called for the scrapping of this tax and seen some
of our members facing increases of 500% on their premiums. To then tax
businesses again on top of the insurance provider's own increases is seen by
many as adding insult to grievous injury. In the coming year business insurance will become an increasingly
contentious issue. Not only is the postponed 'Recovery of NHS charges for
personal injury claims scheme' likely to be implemented leading to around a 10%
increase in ELCI premiums but also SMEs will soon have to contend with the
added costs of environmental liability insurance into the bargain. Gordon Brown
has enjoyed a windfall from the revenue generated by IPT; perhaps it is time
that he gave some back. It will be interesting to see whether the Office of Fair Trading
(OFT) recommendations aimed at improving the business/bank relationship prove
to be effective and FPB will be monitoring progress via our bi-annual bank
survey 2004. Banks provide 60% of all finance to SMEs. We believe it is
essential that banks offer the most competitive deals to their business
customers and through our survey, which will be the first to directly explore
the impact of the OFT recommendations, we intend to quantify any improvements
in the service offered to business customers. One of our core campaigns in the coming year will be to address the
disproportionate burden placed upon small businesses by business rates and the
government's flawed scheme to introduce relief. We have long campaigned for
business rates to be more fairly levied and believe that rates based on size of
business rather than size of premises would be a much fairer method of
calculating this particular tax on business, which according to our evidence is
the third highest cost faced by SMEs. We would also like to see the Chancellor bring to an end the 1%
increase in National Insurance contributions that our members feel is a tax on
jobs. Let's hope that Gordon Brown's New Year's resolution is to provide
tangible results for the small business sector rather than empty rhetoric.
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