|FORUM CELEBRATES KEY VICTORIES FOR SMALL FIRMS IN BUDGET
March 25 2010.
The Forum of Private Business has highlighted several key small business-friendly measures included in this week's Budget.
While critical over some aspects of the Budget - and deeply concerned over its lack of long-term strategy - the Forum believes some of the measures announced will directly benefit smaller firms across the UK.
· The four-year extension to HMRC's Time to Pay scheme, together with the creation of a dedicated helpline for second-time applicants to the tax deferral process.
· The implementation of a five-day target for payments by public bodies;
· The creation of a 'Credit Adjudication Service' with powers to overturn loan refusals.
Time to Pay recently emerged as the most popular Government scheme in a poll of Forum members. In its Budget submission, the Forum also called for more certainty to be provided around the scheme - and for clarification over the position of second-time applicants.
Meanwhile, 10-day payment by public bodies was the second most popular Government scheme in this months' Referendum ballot. The Forum has also carried out extensive research into prompt payment among taxpayer-funded organisations.
Additionally, difficulties in accessing finance have sparked consistent complaints from Forum members over the past two years. The Forum has repeatedly called for loan applications to be decided on a de-centralised, case-by-case basis and hopes that the new service will assist in this process.
The Forum's chief executive, Phil Orford said: "While we're sceptical of the motives behind some of the measures announced in the Budget, coming so soon before a general election, there are some reasons to celebrate.
"We had asked the Chancellor to clarify and extend the Time to Pay scheme as it can be a lifeline for many small firms struggling with cashflow difficulties, so its extension for another four or five years will be welcomed. Additionally, the creation of a dedicated helpline for second-time applicants should help to clear up some of the confusion we've highlighted over whether or not Time to Pay is a 'once only' option.
"The target for 80% of invoices to be paid within five-days for businesses supplying to central government departments should also be welcomed, though we acknowledge that many Government departments are already paying the bulk of their invoices within 10 days. Similarly, the Chancellor's intention to increase the amount of government work being awarded to small firms by 15% should help some small businesses, as long as it is implemented properly and fairly. Many small firms are put off by the bureaucratic processes involved in bidding for public sector work, so there is the danger that this could simply involve more contracts going to the same number of companies."
Mr Orford added: "We believe it is more important to get the dialog going between the banks and businesses to help make sure businesses have access to the capital they need to grow.
"If it is set up and managed properly, the Credit Adjudication Service should also act as a valuable last resort for the many business owners who feel they have been unfairly denied loans and overdrafts."
Other aspects of the Budget which the Forum gave a cautious welcome to included the increased lending targets set for Lloyds and RBS, the new funds for lending to small businesses and the reduction in business rates affecting some commercial properties.
The doubling of investment allowance to £100,000, increasing the lower threshold for capital gains tax and entrepreneurs' relief were also positive moves.
However, the Forum was dismayed over the Chancellor's decision to press ahead with an increase in National Insurance Contributions and fuel duty, despite his decision to stagger the latter into three 1p increases over the next year.
In its submission to the Budget, the Forum had also proposed a comprehensive regulatory review to look at the exhaustive regulatory burden affecting businesses and reduce it wherever possible.
Mr Orford added: "It was hugely disappointing to hear that the increase in National Insurance contributions will still go ahead, together with the bureaucratic burden small businesses face in administering its threshold.
"Small businesses will also have been dismayed by the decision to plough ahead with increases in fuel duty, which came despite Alistair Darling's earlier acknowledgement of the damage high oil prices are wreaking on the economy.
"Additionally, the Chancellor failed to acknowledge both the regulatory burden smaller businesses face and the urgent need for a re-think of workplace legislation."